US CLARITY Act unlikely to pass before August recess — what does it mean for Korea's digital asset law?

The CLARITY Act, a sweeping piece of US legislation that would reshape the regulatory landscape for digital assets, has hit a critical juncture ahead of Congress's August recess. With bipartisan negotiations over ethics provisions dragging on, industry observers say the bill is unlikely to pass before lawmakers break for the summer.

Galaxy Research cut its estimate of the CLARITY Act becoming law this year from 50 percent to 30 percent on Friday, according to the digital asset industry. The research firm cited the absence of bipartisan support needed to advance the bill and a tight legislative calendar before the summer recess, even after a consolidated Senate amendment was made public.

Senate Republicans recently released a 616-page consolidated amendment combining bills from the Banking Committee and the Agriculture Committee. The revised text retains the original framework for establishing legal classification standards for digital assets and defining the jurisdictions of the SEC and the Commodity Futures Trading Commission, while adding provisions on ethics for senior officials and measures to counter illicit finance.

Democrats have pushed back, saying the ethics provisions still fall short. The amendment would bar senior officials — including the president and vice president — and their spouses from issuing or endorsing digital assets for compensation while in office. Democrats argue that concentrating enforcement authority solely within the Justice Department under the president makes it effectively impossible to oversee presidential conflicts of interest.

Sen. Elizabeth Warren, the ranking Democrat on the relevant committee, said in a statement that the bill "prohibits enforcement actions by other parties, including state attorneys general," adding that the structure would "prevent a future Justice Department from holding President Donald Trump accountable for violations committed during his term."

Warren also criticized the arrangement, saying Trump "can ignore the law because he personally appointed his own private attorney as the head of the Justice Department." Attorney General nominee Todd Blanche previously served as Trump's defense attorney in his criminal cases.

Securing Democratic votes is the central challenge for the CLARITY Act to clear the Senate floor. Ending a filibuster in effect requires 60 votes, and with Republicans holding 53 seats, the party needs at least seven Democrats to cross the aisle. Sens. Angela Alsobrooks and Ruben Gallego, both Democrats who voted for the bill in the Senate Banking Committee, have since announced their opposition to the consolidated amendment.

Industry observers broadly view political dynamics as the biggest obstacle to the bill's passage. Nick Mursalem, chief executive of Ava Cloud, an enterprise blockchain infrastructure firm, said he believes "the likelihood of passage before August is low," noting that "in the US political system, the two parties often clash even when they want the same policy."

He added that "in the US, there are cases where both parties pack what they each want into a single bill and then reach a deal," and that while he believes "the CLARITY Act will ultimately pass, it is uncertain at this point."

Kim Se-hee, a researcher at Eugene Investment & Securities, wrote in a report on Friday that "at this point, it is politically advantageous for both sides to maintain their negotiating leverage rather than compromise early." The analysis described the standoff as a game of chicken in which both parties want the bill to pass but neither wants to be the first to concede ground.

Meanwhile, discussions on South Korea's own basic digital asset law are expected to pick up pace again in the second half of the year. Rep. Park Min-gyu of the Democratic Party of Korea, a member of the National Assembly's Political Affairs Committee, said recently that once a new policy committee chair is appointed after the party's August convention and the party's digital asset task force is reactivated, the Political Affairs Committee, the presidential office and related ministries could begin discussing a timeline for introducing legislation, with a rough outline potentially emerging around September.

Industry observers say the delay in passing the CLARITY Act will have limited impact on South Korea's basic digital asset law. The United States, operating under a federal system, is primarily focused on dividing jurisdiction between the SEC and the Commodity Futures Trading Commission and distinguishing between securities and commodities — a framework that differs fundamentally from South Korea's regulatory structure and market environment.

The key domestic variables, however, are whether the party's task force can be reconstituted smoothly and whether consultations with relevant agencies proceed without friction. Observers also note that discussions on core issues — such as reserve assets for won-denominated stablecoins and the risk of contagion to financial markets — remain insufficient. One industry official said that "for legislation to be expected within the year, digital asset policy must be set as a priority for the party leadership and the policy committee after the convention," warning that "if even one step in the schedule hits a snag, passage this year will not be easy."

Guidelines for corporate investment in digital assets are also being held up alongside the broader legislative discussions. Kim Seong-jin, head of the virtual assets division at the Financial Services Commission, said at an academic conference on corporate market access and the digital asset ecosystem held at the National Assembly on Thursday that he is "personally optimistic" about the possibility of opening the corporate market this year.

On the timing of the government's submission of a draft basic digital asset law, Kim said the schedule "is being continuously discussed with relevant agencies and the National Assembly," adding that "since the direction has been included in the second-half economic policy guidelines, we will make every effort to move as quickly as possible."