Crypto Market Structure Bill Faces Critical Delay: Citibank Warns CLARITY Act May Stall Past 2026

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Crypto Market Structure Bill Faces Critical Delay: Citibank Warns CLARITY Act May Stall Past 2026

WASHINGTON, D.C., March 2025 – A pivotal piece of U.S. cryptocurrency legislation, long anticipated as a foundational framework for the digital asset economy, now faces a significant and potentially prolonged delay. According to a new analytical report from global financial giant Citibank, the Crypto-Asset Market Structure bill, known as the CLARITY Act, may not see passage until after 2026. This forecast underscores the immense complexity of regulating a rapidly evolving technological frontier, where defining decentralized finance (DeFi) presents the most formidable obstacle to congressional consensus.

The CLARITY Act: A Catalyst for Crypto Market Structure

Introduced to provide long-awaited regulatory certainty, the CLARITY Act aims to establish a comprehensive market structure for digital assets in the United States. The legislation seeks to clarify jurisdictional boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Furthermore, it proposes clear rules for trading platforms, custody, and stablecoin issuance. For years, industry participants have cited the lack of such a framework as a major barrier to institutional adoption and innovation. Consequently, the bill represents a potential watershed moment for integrating cryptocurrencies into the mainstream financial system. However, Citibank’s analysis suggests the path forward is fraught with intricate negotiations.

DeFi Definition: The Primary Hurdle for Legislation

Citibank’s report identifies a single, thorny issue as the primary source of delay: defining decentralized finance and its participants. Lawmakers must grapple with a fundamental question—at what point does a decentralized protocol, its underlying software, or its developers transition from being neutral technology to becoming regulated financial service providers? This question lies at the heart of the legislative impasse.

• Regulatory Perimeter: Determining how to apply traditional concepts like “broker-dealer” or “exchange” to permissionless, code-based systems.
• Developer Liability: Assessing whether software creators can be held responsible for how others use their open-source protocols.
• Technology Neutrality: Crafting rules that protect consumers without stifling technological innovation or pushing development offshore.

In contrast, the report notes that debates surrounding stablecoin regulations, including issuer requirements and reward mechanisms, appear to have more room for political compromise. This distinction highlights the unique challenge DeFi poses to existing legal paradigms.

Expert Analysis on the Legislative Timeline

Financial policy analysts echo Citibank’s cautious outlook. They point to the 118th Congress’s crowded legislative calendar, which includes must-pass appropriations bills and other high-priority economic policies. Furthermore, the technical complexity of DeFi requires extensive committee hearings, expert testimony, and drafting precision. Historical precedent also suggests that groundbreaking financial legislation, such as the Dodd-Frank Act, often undergoes years of debate and revision before final passage. The iterative nature of this process, while necessary for robust lawmaking, inherently extends timelines, especially for a novel asset class like cryptocurrency.

Implications of a Delayed Crypto Market Structure Bill

A delay beyond 2026 carries substantial consequences for multiple stakeholders within the U.S. financial ecosystem. The continued regulatory ambiguity may influence business decisions and strategic planning across the industry.

Meanwhile, other global jurisdictions, including the European Union with its MiCA framework and the United Kingdom with its phased regulatory approach, continue to advance their own crypto asset regimes. This international movement increases pressure on U.S. lawmakers to act but also complicates the drafting process to ensure competitive parity.

The Path Forward for U.S. Crypto Regulation

Despite the forecasted delay, Citibank’s report maintains that the CLARITY Act remains the most viable legislative vehicle for comprehensive crypto market structure. The coming months will likely see intensified negotiations within key congressional committees. Stakeholders anticipate possible legislative maneuvers, such as advancing less controversial portions of the bill—like stablecoin provisions—as standalone measures. However, most experts agree that a holistic approach addressing both centralized and decentralized finance is ultimately necessary for a coherent regulatory environment. The ongoing dialogue between industry representatives, regulators, and legislators will be critical in bridging definitional gaps and finding workable solutions.

Conclusion

Citibank’s assessment delivers a sobering reality check for the U.S. cryptocurrency sector. The journey toward a definitive crypto market structure bill is proving longer and more complex than many hoped, with the core issue of DeFi regulation acting as the primary brake on progress. While the goal of passing the CLARITY Act persists, a realistic timeline now extends beyond 2026. This delay underscores the monumental task of fitting innovative, decentralized technologies into traditional regulatory boxes. The eventual resolution of this challenge will not only shape the future of digital assets in America but also define the country’s role in the next evolution of global finance.

FAQs

Q1: What is the CLARITY Act?
The Crypto-Asset Market Structure bill, or CLARITY Act, is proposed U.S. legislation designed to create a comprehensive regulatory framework for digital assets. It aims to clarify rules for exchanges, custody services, stablecoins, and the regulatory roles of the SEC and CFTC.

Q2: Why is defining DeFi so difficult for lawmakers?
DeFi challenges traditional legal definitions because it operates through decentralized, autonomous software rather than centralized intermediaries. Lawmakers struggle to determine where to draw the line for regulation—on the software, the developers, or the users—without hindering technological innovation.

Q3: What are the potential consequences if the bill is delayed past 2026?
Continued regulatory uncertainty could slow institutional investment, push innovation to other countries, leave consumers with inconsistent protections, and force U.S. crypto businesses to operate under an unclear and potentially restrictive patchwork of rules.

Q4: How does the stablecoin debate differ from the DeFi issue in the bill?
According to Citibank’s analysis, stablecoin regulation involves more established financial concepts like issuer reserves and transparency, where compromise is easier. DeFi regulation requires creating entirely new legal categories and principles, making consensus far more challenging.

Q5: Are other countries moving faster on crypto regulation than the U.S.?
Yes, several jurisdictions are advancing. The European Union’s Markets in Crypto-Assets (MiCA) regulation is already being implemented, and the UK, Singapore, and Japan are also progressing with tailored frameworks, potentially giving them a first-mover advantage in shaping the global digital asset landscape.

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