US Crypto Legislation Stalls While Regulatory Gaps Get Filled by Agencies
The Digital Asset Market Clarity (CLARITY) Act drew a final blow in the US Senate when a cloture motion fell one vote short of the required threshold. The tally came in at 49 in favour and 50 against, meaning the bill lacked the 60 votes needed to proceed. The defeat stuns observers given a full year of groundwork had gone into the legislation.
However, the outcome is not as final as it first appeared. Republican Senator Thom Tillis cast his objection at the eleventh hour, later explaining the move was tactical — designed to preserve his ability to trigger a fresh vote down the line. There is precedent for a quick reversal: the GENIUS Act endured a similar cloture failure before clearing the chamber just 11 days later.
Still, the arithmetic of the legislative calendar works against a fast revival. Democrat Congressman Shri Thanedar, who had backed CLARITY in the House, described the compressed timeline as a "major barrier." Seven Democratic senators who voted against the measure publicly stated they "remain committed" to seeing it through, though they offered no firm timeline. Senator Angela Alsobrooks accused Republican leadership of killing the bill at the last instant after she and her colleagues were ready to reach a compromise.
Abhishek Vaidyanathan, chief legal officer at NEAR, pointed out that the House had already scrapped two scheduled sitting weeks and that the Senate's state work period kicked in on October 5. He concluded that the next Congress is the realistic venue for tackling crypto market structure.
Ripple CEO Brad Garlinghouse took a pragmatic view after the vote, forecasting that US regulators would "continue to work hard to issue rules to fill the legislative gap."
That gap-filling began almost immediately. Just two days after the failed cloture, the SEC unveiled a five-year Innovation Exemption that permits limited trading of tokenized US equities on decentralized public blockchains. The rule allows automated market makers to facilitate these trades without requiring the platforms to register as securities exchanges. Crucially, the exemption does not extend to "synthetic" stock tokens that lack the full rights of traditional shares — a provision that effectively rules out most tokens already issued by xStocks and Robinhood.
The CFTC followed with a no-action position for "passive software" providers that connect end users to CFTC-registered derivatives firms and exchanges. The agency said it would not recommend enforcement against qualifying providers or their staff for failing to register as introducing brokers. The relief could smooth the path for crypto wallets and consumer apps to offer access to regulated derivatives, including perpetual contracts and prediction markets.
The CFTC also submitted a draft rule set to the White House under the title "Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets." The filing sits at the "prerule" stage, meaning it has not yet been formally proposed for public comment.
On the trading front, Coinbase filed an application with the CFTC to launch 24/5 perpetual futures on individual US equities. Kalshi submitted a nearly identical proposal the same day.
In a separate milestone, the American Reserve Modernization Act of 2026 cleared the House Committee on Financial Services. The bill would codify the existing executive order creating a Strategic Bitcoin Reserve into permanent statute and establish a Digital Asset Stockpile for other forfeited cryptocurrencies under the Department of the Treasury. It mandates that every federal agency conduct a full audit of its digital asset holdings and submit quarterly proof-of-reserve reports. The legislation also directs a study into budget-neutral strategies for acquiring additional Bitcoin. Connor Brown, executive director of the Bitcoin Policy Institute, called the passage a "genuinely historic step for Bitcoin policy."
The House Ways and Means Committee also advanced the Digital Asset Tax Certainty Act with bipartisan backing, moving forward legislation that would overhaul the federal tax treatment of digital assets.
Market Snapshot and Arbitrum's 70x Bull Case
By the close of the week, major cryptocurrencies posted solid gains. Bitcoin (BTC) rose 5.9 per cent to $81,185, Ethereum (ETH) climbed 6.6 per cent to $2,639, and XRP (XRP) edged up 5.4 per cent to $1.40. The total crypto market capitalization stood at $2.78 trillion per CoinMarketCap data.
Among the top 100 tokens by market cap, NEAR Protocol (NEAR) led the pack with a 76.4 per cent weekly gain, followed by Arbitrum (ARB) at 64.3 per cent and Ethena (ENA) at 61.6 per cent. On the downside, Stable (STABLE) fell 11.6 per cent, Pi (PI) dropped 11.3 per cent, and SPX6900 (SPX) slipped 1.8 per cent.
Standard Chartered has published a bullish outlook for Arbitrum, projecting the token could reach as high as $10 by 2030. From current levels that implies roughly a 70-fold increase — a return that substantially outpaces the bank's own forecasts for Bitcoin and Ether over the same horizon.
Geoff Kendrick, the bank's global head of digital assets research, argued that Arbitrum's economic model offers significant upside because the layer-2 network captures 10 per cent of net protocol revenue generated by companies building on it. He highlighted Robinhood Chain as the first major real-world example. Under that arrangement, Robinhood-related fees are set to push Arbitrum's September revenue to around $5 million, a five-fold jump from the level recorded before Robinhood Chain went live in July.
Kendrick cautioned that the principal risks to his price target include a slower-than-expected pace of asset tokenization and intensifying competition from rival blockchains.
Cybercrime, State Actors, and the KYC Dilemma
The Revolut data breach took an odd turn when a second hacker, operating under the handle "IAmNotAVillain," publicly demanded 6,000 Monero (approximately $3 million) within 24 hours, threatening to sell customer records — including passports and KYC selfies — to criminal groups. The actor suggested the earlier, far more extravagant demand of 10,000 Bitcoin (roughly $780 million) made by a group calling itself "Revolut Smilik" likely came from a former associate who possessed only a small sample of the stolen data.
The incident underscored the systemic risk of mandating KYC checks that force thousands of firms to store identity documents across the internet, creating what critics call honeypots for attackers. Zero-knowledge proof technology could allow identity verification without transmitting documents to third parties, but the approach has not yet achieved widespread adoption.
On the state-sponsored front, a Chainalysis report found that state-linked hackers accounted for roughly two-thirds of new malicious activity on public blockchains each quarter. The number of instances in which attackers stored malware instructions or infrastructure data on-chain surged 420 per cent over the trailing 12 months. Chainalysis identified North Korea- and Iran-linked operators among the state actors using the technique and attributed previously unlinked activity on Tron, Aptos, and BNB Smart Chain to UNC5342, a North Korea-linked group tracked by Google Threat Intelligence. The firm noted that blockchain storage increases the durability of malware campaigns because the data persists even after domains, servers, or code repositories are taken offline.
Research Findings and a Hong Kong Fraud Sentencing
Researchers at the Bank for International Settlements reported that estimates of Bitcoin on-chain transfer values can diverge by as much as a factor of six depending on the measurement methodology employed. The gap stems from differences in how change outputs and transfers back to the originating address are treated. The issue extends to Bitcoin's market capitalization: the conventional figure has at times been up to four times higher than what the researchers call "realized capitalization," which values each coin at the price prevailing when it last moved.
In a separate legal development, a former customer relationship manager at China Construction Bank (Asia) in Hong Kong was sentenced to four years in prison for falsely authenticating letters of credit totalling more than $1.6 billion. Lam Chun-yin, 32, had pleaded guilty in District Court and was ordered to pay restitution exceeding $470,000 in cryptocurrency bribes she had received, according to reporting by The Standard.
