Why banks and offshore hubs like Dubai are winners of the Senate killing the Clarity Act

U.S. banks and overseas crypto hubs such as the United Arab Emirates (UAE) stand to benefit after the Senate failed to advance the Clarity Act last week, according to lawyers and industry experts.

The Clarity Act’s 49-50 Senate cloture vote means the crypto industry will not get the federal market structure framework it had sought. Instead, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) will continue to shape policy through existing rules, interpretations and exemptions.

The legislative battle over the bills was not only about crypto oversight, but it also exposed a struggle over whether stablecoin platforms could offer rewards that might compete with bank deposits, as well as ethical considerations for people in government.

“Banks won this round. But the reason they are fighting so hard is that banks increasingly see stablecoins as competition for deposits, not just as another crypto product,” said Anton Golub, head of exchange go-to-market at Forte, in a Telegram message.

The immediate outcome of the failure to pass the law is that crypto regulations in the United States will continue to be created outside Congress. The SEC moved quickly after the vote, issuing a temporary conditional exemption that allows eligible venues to trade tokenized U.S. stocks through permissioned liquidity pools on public blockchains.

Soon after, the CFTC sent crypto rules to the White House for review. The agency submitted a new proposal; the details were not disclosed. For now, which crypto assets it contemplates, what exchanges would need to do to qualify for licenses, what restrictions would apply and how far the agency believes its authority extends, remains unclear. All the meanwhile, the “Clarity Act is dead, at least for now,” Jesse Hamilton, CoinDesk’s deputy managing editor in charge of global policy and regulation, wrote in an analysis that explains what very few appear to know: what the Clarity Act actually is.

“While the U.S. continues debating the Clarity Act, in the UAE we actually have clarity,” Irina Heaver, a Dubai-based crypto lawyer and founder of NeosLegal, said via Telegram. More than 110 regulated virtual-asset businesses operate in the country, with about 20 more holding in-principle approvals, she added.

“Every additional year that major markets spend debating how crypto should be regulated gives jurisdictions that have already created functioning regulatory frameworks another year to attract businesses, founders, talent and capital,” she said. “Regulatory clarity is no longer just a legal issue. It is a competitive advantage for the country.”

Kyle Bligen, executive director at the Decentralization Research Center, said “Congress remains the best route to a comprehensive market structure framework.” He said the Senate’s vote “was disappointing, but it does not change the underlying problem: digital assets still need clear and durable rules.”