The U.S. crypto industry could lose some ground to overseas markets in the short term after the Senate failed to advance the Clarity Act, although regulatory action by the SEC and CFTC may still offer a way forward.

The Senate’s decision Tuesday left the world’s largest economy without a comprehensive federal framework for digital assets and kept questions unresolved about the respective authority of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).

The immediate market response was visible among U.S.-focused crypto companies. Shares of Coinbase Global and stablecoin issuer Circle Internet fell 10% following the vote, reflecting investor concerns over the continued regulatory uncertainty.

The implications extend beyond publicly traded companies. U.S. retail investors still lack a unified regulatory structure for digital assets, while institutional investors face greater uncertainty when considering large capital allocations. The policy gap could also affect the U.S. position as countries compete to attract crypto companies, investment and skilled workers.

“The practical reality is that capital and talent move toward environments where the rules are clearest,” said Lin Han, CEO and founder of crypto exchange Gate.

Han said digital-asset service providers with licenses in established foreign jurisdictions are likely to benefit in the near term. Gate primarily operates in Asia and ranks fifth on CoinGecko.

However, Han said the absence of clear U.S. rules remains a problem for the wider crypto industry, regardless of where individual businesses are headquartered.

Foreign Markets Advance Their Crypto Rules

The U.S. and U.K. remain among the major global financial centers without fully established crypto frameworks. The U.K.’s broader rules are not scheduled to come into effect until next year.

The European Union is further ahead after adopting its Markets in Crypto-Assets (MiCA) framework in 2023. The rules became fully effective in July, while several Asian markets are also moving forward with their own digital-asset regulations.

“The true losers are the American public and the domestic tech ecosystem,” said Stefan Muehlbauer, head of U.S. government affairs at blockchain security firm CertiK.

Muehlbauer said overseas crypto hubs, gray-market operators and markets across Asia and Europe could gain as companies seek jurisdictions where regulations are more clearly defined.

The SEC and CFTC can still introduce rules through their existing authority. The SEC demonstrated that capability Thursday by issuing its “innovation exemption” for tokenized securities trading, potentially creating a regulatory pathway for U.S. companies in that sector.

Muehlbauer said agency action, however, is not equivalent to legislation. Companies considering long-term investments, product launches and compliance requirements are likely to need the certainty that comes from statutory rules.

Vote Does Not Guarantee a Move to Asia

Gracy Chen, CEO of crypto exchange Bitget, said it would be premature to assume the Senate vote will cause crypto activity to migrate from the U.S. to Asia.

“I wouldn’t look at it as volume suddenly moving from the U.S. to Asia because of one vote,” she said. “Crypto is inherently a global market, and traders will continue to go where they can find the products, liquidity and access they need.”

Chen said the failed vote nevertheless extends uncertainty around U.S. market structure and the treatment of digital assets.

Bitget’s plans to enter the U.S. market remain in place, she said, with the company intending to use the appropriate licenses and corporate structure. Those plans do not depend on the Clarity Act becoming law.

Matt Hougan, chief investment officer at Bitwise Asset Management, characterized the setback as a delay rather than a reversal of the broader trend.

“It would have been better if it had passed,” Hougan said. “With it failing, I think the road ahead is bumpier. But the trend is still good, and I don’t think it’s changed too much from where it was Monday, before the vote.”

Hougan noted that President Donald Trump’s pro-crypto administration still has two and a half years remaining, giving policymakers additional time to pursue regulatory changes.

He also said the outcome should not prevent investors from examining smaller digital assets with strong token economics and real-world-asset connections.

SEC and CFTC Rules Could Matter in the Near Term

Tom Farley, CEO of CoinDesk owner Bullish, said the failure of the bill does not eliminate the possibility of regulatory progress.

“Durable legislation would give the digital asset industry greater certainty. But even with legislation, the real work of implementation happens at the agencies, and agencies can move faster,” Farley said in a post on X.

He said SEC and CFTC rulemaking could prove particularly important for tokenized securities, including rules governing issuers, transfer agents and issuer-sponsored tokens.

Nilmini Rubin, chief policy officer at Hedera, said the Senate vote should not be viewed as the end of the legislative process.

“We’ve seen policymakers put real time and effort into studying the underlying technology, which is a positive step in the right direction,” she said. “I think most of the industry is still as ambitious as ever that we’ll get to where we need to be.”

Rubin also warned that continued uncertainty could weaken the United States’ competitive position.

“The largest loser is U.S. competitiveness because uncertainty pushes innovation and adoption in the U.S. behind other countries,” she said. “The longer the market lacks clear rules, the more difficult it is to ensure the United States remains at the center of this system, rather than on the margins of it.”

She expects stablecoins, tokenization and cross-border payments to continue developing despite the legislative setback. However, Rubin said consumer protection could become more challenging without a statutory framework.

Regulatory Clarity May Still Emerge

Despite the Senate setback, several industry executives expect the SEC and CFTC to continue using their existing powers to establish rules for digital assets.

Such agency-level measures could provide clarity in individual areas while Congress continues to debate broader crypto legislation. Whether those rules can deliver the same durability as federal legislation remains uncertain.

Richard B. Levin, chair of FinTech and regulation at Taft Stettinius & Hollister LLP, described the broader regulatory challenge during a panel at the 2026 European Blockchain Convention in Barcelona:

“You can count on Americans to do it absolutely wrong until they finally get it right.”