Senate setback fails to slow record crypto dealmaking
The Clarity Act, the bill that would have given the United States its first lasting statutory rulebook for digital assets, failed a procedural vote in the Senate on 15 September, drawing 49 votes in favour and 50 against, short of the 60 needed to advance. Negotiations had foundered over ethics restrictions covering senior officials’ crypto business interests, including President Donald Trump’s, alongside concerns about investor protection and illicit finance. With the November midterms approaching and little legislative time remaining, the defeat sharply reduced the chances of passage this year.
Yet the bankers and investors who structure crypto mergers and acquisitions are not hitting the brakes. Deal value in the digital asset sector reached a record $9.7 billion in disclosed value in the first half of 2026, up 44% from a year earlier, according to CryptoRank Research. The Senate’s refusal to advance the flagship market structure bill has, in the view of many dealmakers, simply shifted the burden of providing certainty from Capitol Hill to the Securities and Exchange Commission and the Commodity Futures Trading Commission, both of which have been moving quickly to fill the gap.
The result is a market that is splitting in two. Deals in areas where regulators have already drawn clearer lines, such as tokenisation, custody and payments, are expected to keep flowing. Businesses exposed to unresolved questions about whether a token is a security or a commodity, and whose value depends on that answer, remain harder to buy.
Why the Clarity Act mattered, and why its failure stings
The crypto industry had waited years for Congress to deliver what it has long wanted: a durable framework clarifying which digital assets fall under the oversight of the SEC and which fall to the CFTC. That distinction matters enormously in practice. It determines which disclosure regime applies, which registration path a token issuer must follow, and which enforcement agency can pursue a platform. A statutory answer would have provided greater certainty for businesses and investors than relying largely on regulators whose policies can change between administrations.
Senator Cynthia Lummis, the Wyoming Republican who has championed the bill, has been among the most persistent advocates for a comprehensive digital asset framework on Capitol Hill. But the September vote exposed the fault lines that have dogged the legislation throughout: partisan disagreement over ethics rules for officials with crypto holdings and business interests, and Democratic concerns that the bill’s investor protections and anti-money-laundering provisions did not go far enough.
The timing could hardly be worse for legislative hopes. The midterms consume the autumn calendar, and a post-election lame-duck session offers only a narrow window. Many in the industry now assume the bill, or something like it, will have to wait for a new Congress, meaning the earliest realistic statutory clarity could be a year or more away.
That delay has real costs. Buyers pricing an acquisition must underwrite regulatory risk, and unresolved questions about how a target’s core activities will be treated translate directly into wider risk premiums, more complex deal structures, or transactions that simply never reach signature. Traditional financial firms, which have been among the most active new entrants into crypto dealmaking, are particularly sensitive to this. A bank or exchange operator with a public shareholder base can justify buying a licensed, well-understood business far more easily than one whose flagship product sits in a grey zone.
Regulators step in, and dealmakers follow
What has kept sentiment buoyant is the speed of regulatory action outside Congress. Two days after the Senate vote, the SEC approved a temporary “Innovation Exemption” allowing limited trading of tokenised US stocks on certain onchain venues. On 1 October, the agency proposed a new rule clarifying how investment firms can handle and safeguard customer crypto assets. The CFTC, for its part, has been removing barriers of its own, providing relief to certain software providers and updating guidance around tokenised investments and blockchain-based recordkeeping.
“The Clarity Act’s setback doesn’t change the trajectory,” said Paul McCaffery, head of digital assets at investment bank KBW. “The SEC and CFTC are already moving proactively to provide the regulatory certainty markets need, and that’s unlocking a wave of M&A across digital assets, traditional financial services, and fintech alike.”
McCaffery argues that the momentum behind tokenisation and digital payments is building internationally first and will inevitably return to the United States, and that firms which wait for Congress to act will miss the boat. “It’s taken a long while to get here, but the convergence is real and buying versus building is the more efficient route,” he said.
Todd White, partner at advisory firm Architect Partners, shares that view, particularly on tokenisation. “SEC’s decisive move in the wake of legislative failure feels poised to catalyse activity around tokenisation, for both commercial traction and strategic transactions,” he said. “We’d already seen significant shifts toward more liquid assets and institutional finance. The new ‘Innovation Exemption’ should bolster that momentum.”
The deal numbers bear out where the confidence is coming from, though with an important caveat. The record $9.7 billion in first-half disclosed deal value came from just 87 announced acquisitions, an 8% fall year on year, and the four largest deals accounted for 76% of disclosed value. The boom is being driven by a handful of very large transactions rather than a broad rise in activity across the sector.
Payward, the parent company of Kraken, illustrates the pattern. The firm agreed to buy the payments company Reap for $600 million and the derivatives platform Bitnomial for up to $550 million, while Nasdaq agreed to invest $100 million in Payward alongside an expanded commercial partnership. Those transactions share a common logic: they are acquisitions of licences, technology and distribution, assets whose value does not hinge on Congress resolving the securities-versus-commodity question. A derivatives platform comes with CFTC-regulated infrastructure. A payments company comes with rails and licences. These are the sorts of targets that trade well even when comprehensive legislation is stalled.
The counterargument: rulemaking is no substitute for law
Not everyone is convinced that agency action can stand in for legislation. Dmitriy Berenzon, partner at venture firm Archetype, argues that a clearer legal framework would produce more deals, more partnerships across financial services and beyond, and ultimately more economic prosperity for US citizens and those abroad.
“We have already seen how much of a positive impact the GENIUS Act has had on stablecoin adoption, so the more clear and informed the rulemaking, the better,” Berenzon said. The comparison is pointed. The stablecoin statute gave issuers and their commercial partners a fixed set of rules, and adoption followed. Market structure legislation was supposed to do the same for exchanges, brokers and token issuers, and its absence leaves those segments operating under guidance that a future SEC or CFTC leadership could reinterpret.
That is the structural weakness in the regulators-first thesis. Exemptions, no-action relief and proposed rules are useful, and they can unlock specific categories of activity, as the Innovation Exemption appears to be doing for tokenised equities. But they are administrative instruments. They can be narrowed, allowed to lapse or reversed, and the temporary nature of the SEC’s exemption is explicit in its name. Buyers underwriting a five- or ten-year hold need more than a temporary permission slip, which is precisely why the largest deals are clustering around assets whose value rests on licences and infrastructure rather than on novel token structures.
What the stall means for the market
The most likely near-term outcome is a continued two-speed market. Deal flow in tokenisation, custody, payments and licensed derivatives infrastructure should remain robust, because the SEC and CFTC have effectively drawn workable boundaries in those areas and buyers can price the residual risk. Activity in token issuance, novel trading models and anything that turns on the unresolved jurisdictional question will stay thinner, with smaller cheques, longer diligence and more contingent deal structures.
The concentration of value in a handful of mega-deals is also worth watching. When four transactions account for three-quarters of disclosed value, headline growth flatters the underlying market. A broad-based M&A recovery, with rising deal counts among mid-sized firms, would be the stronger signal that regulatory confidence has genuinely broadened. For now, the data suggests confidence is real but narrow.
The political calendar adds a further layer of risk. If the midterms produce a Congress even less inclined to pass market structure legislation, the industry’s reliance on agency rulemaking deepens, and with it the exposure to a change of administration or a shift in commission leadership. Conversely, a post-election window that revives the bill, with the ethics provisions renegotiated, could unlock the pent-up dealmaking that firms like Archetype believe is being suppressed.
For dealmakers, the practical conclusion is straightforward. The record first half shows that regulatory uncertainty is no longer a hard brake on crypto M&A, but the falling deal count shows it is still a drag. Firms are choosing their targets carefully, buying licences, technology and distribution where the rules are settled, and waiting where they are not. Congress may yet deliver the Clarity Act or its successor. Until it does, the SEC and CFTC hold the pen, and the market is following it closely.
For more on the legislative landscape, see our regulation coverage.
