Crypto market structure can't wait for shot at post-election Clarity Act surge: White House

White House and U.S. Treasury officials agree that despite some hope that Congress' "lame duck" session could see the bill again, the work's in regulators' hands.

WASHINGTON, D.C. — Officials from the White House and the U.S. Treasury Department agreed that the so-called lame duck session of Congress doesn't offer enough hope for the Digital Asset Market Clarity Act to divert attention from the proper new focus: the crypto work of the U.S. markets regulators.

Patrick Witt, the White House crypto adviser, and Luke Pettit, assistant secretary of the Treasury for financial institutions, expressed similar views at the CoinDesk Policy & Regulation event in Washington on Tuesday. The several weeks at the end of the year in which federal lawmakers' work is sandwiched between the elections and the arrival of the new Congress — the lame duck session — will likely depend on the outcome of the midterm congressional election in November, they both suggested.

"I don't think it's dead, but I do think that there is a sense that the focus is shifted to the administration," Pettit said at the Washington event, just a week after the Senate failed to advance the Clarity Act to establish U.S. crypto market regulations — the digital asset industry's top policy priority. In Congress, he said, "the waters are incredibly chilled" for the legislation.

The congressional elections will determine whether the Republican majorities change hands in the U.S. House of Representatives, Senate or both and "will motivate certain people or reduce motivation for others," Witt noted — with many political observers assuming Democrats won't want to make any Clarity Act deals if they surge to greater authority at the end of the year.

"There's no time to waste now," said Witt, whose primary task to get the Clarity Act passed by this Congress was foiled by U.S. Senate politics. He pointed to a rush of crypto progress since last week at the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. "There's no holding them back in hopes of a lame duck passage of the bill."

Witt granted that the regulators' rules and exemptions may run into "challenges, legally," without the underpinning of the law the administration had hoped to see, but he said, "We're going to do what we can with the authorities that we have, which are many."

"Did we really need to drag that out for a year only to get a purely political result like that?" Witt asked. "I know we're close to an election, but still, I just think it was a major disappointment."

However, last year's crypto legislative success in converting the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law is still an ongoing focus of the Treasury and banking regulators assigned to implement it.

Pettit, who had a hand in creating the GENIUS Act as a Senate staffer, said the banking agencies and Treasury are writing GENIUS rules and facing near-term deadlines in the law.

"We're very cognizant of the different deadlines in front of us," Pettit said. "I think we're well on track to make all those deadlines."

Witt noted that companies are advertising their "GENIUS-compliant stablecoins," though that status doesn't yet exist in the absence of final rules.

"But people skating to where the puck is going and trying to set up their policies, their procedures and their structures in order to be GENIUS-compliant is very healthy," the White House adviser said. Witt said a two-headed stablecoin system will result when GENIUS is in place, between the tokens that comply and those that don't, and the market will have to decide its preference.

"I would think it's probably going to reward those that are operating in conformity with the regulatory jurisdiction," Witt said, adding that the market will expand as asset tokenization catches fire with the arrival of U.S. oversight — as begun last week at the SEC.

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