CLARITY Act Fails in Senate, and Seoul Should Take Notes

The U.S. Senate on Sept. 15 blocked the proposed CLARITY Act, leaving digital-asset market rules without a federal framework and offering Seoul a cautionary precedent. The bill fell short of the 60 votes needed to proceed, despite the House having passed an earlier version and senators having spent months revising the draft. The immediate setback was American; the legislative risk travels well.

The bill would have clarified the respective roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission, coordinated token classification, and set custody and intermediary obligations in one statute. Its sponsors made 126 substantive changes after more than a year of negotiation, and the final draft still carried unresolved disputes over stablecoin rewards, bank funding and ethics rules for public officials. It retained support from BlackRock, Fidelity and SoFi. The architecture nonetheless collapsed on one procedural vote — a reminder that breadth of support does not guarantee passage.

What does the failure change for firms?

Without legislation, companies remain dependent on SEC and CFTC interpretations that may shift under future administrations or court challenges. The authors of the analysis, Daniel Castro, president of the Information Technology and Innovation Foundation, and Kim Se-jin, a tech policy analyst at ITIF, argue a statute gives companies firmer ground for hiring, investment and product development. A company gains little from knowing how its token is classified if it still cannot identify the license, custodian or trading venue it needs. The bill's value lay precisely in closing that sequence of legal guesses.

The GENIUS Act already gives the United States a federal framework for payment stablecoins; CLARITY was meant to fill the wider market-structure gap. With midterm elections approaching, the bill's future remains unclear. In plain terms: the uncertainty CLARITY was designed to end will now persist through at least the next electoral cycle.

Where does Korean policy stand?

The Financial Services Commission deserves credit, the authors argue, for treating market expansion and risk management as parallel goals. Participants in its March Virtual Asset Committee meeting called for rules allowing diverse business models, and the gradual opening of corporate trading marks another step forward. Yet two contested questions could consume the broader bill. The FSC committee has discussed requiring banks to hold 50 percent plus one share in a won stablecoin issuer, alongside ownership-dispersion requirements for crypto exchanges. On Aug. 27, the FSC clarified that no exchange shareholder cap had been finalized.

That caution is welcome; either measure could reshape competition before Korea learns which business models can operate safely. The hard part of a won stablecoin is the won — keeping redemption at par during stress. A bank shareholder may add credibility, but ownership alone cannot guarantee sound reserves, prompt redemption or resilient technology. The law should instead set technology-neutral standards for reserve assets, segregation, audits, cybersecurity and operational continuity, letting banks and qualified technology companies compete on proven capability rather than institutional label.

Exchange rules should follow the same logic. A mandatory ownership cap could force restructuring and deter investment without directly improving customer-asset protection. Rules on segregation, conflicts of interest, market surveillance, capital and cybersecurity address those risks more directly. Before limiting ownership, the authors write, policymakers should identify the problem, explain why existing tools are inadequate and show how a cap would produce a better outcome. In short: restriction should carry the burden of proof, not the market.

What should the National Assembly do?

Castro and Kim urge the Assembly to pass the enabling framework promptly, placing asset classification, activity-based licensing, custody, disclosure and market-conduct rules in a common legal spine. Contested structural restrictions can carry pilot periods, mandatory reviews or sunset provisions, preventing one unresolved rule from delaying certainty across the sector. Clear, activity-based rules would also be easier to compare with U.S. rules, reducing compliance costs for firms operating in both markets — while prolonged uncertainty risks sending product development and capital toward jurisdictions with credible licensing paths.

Seoul still has time to avoid Washington's outcome. Whether it does depends on whether lawmakers can resist making every unresolved restriction a condition of passage.