The Senate on Tuesday fell short of the 60 votes needed to advance the latest version of the CLARITY Act. The bill now returns to negotiations rather than moving forward on the Senate floor. That is a delay, not a defeat, and it hands the Senate something it did not have last week: time to get the text right. One major issue still remains unresolved. As written, the act does not provide a transition rule for digital asset transactions that have already taken place under the existing legal framework. Congress now has the time to fix that using a framework it has already enacted once before: the LIBOR Act.

Landmark financial legislation often changes substantially before final passage, and the version of CLARITY that ultimately becomes law has not yet been written. That next draft may be the Senate’s best opportunity to address the legal uncertainty surrounding past digital asset transactions before the new framework takes effect.