The Senate blocked the CLARITY Act on September 15. Not narrowly: the crypto Clarity Act failed to get the 60 votes needed to advance after a 49-50 vote that didn’t manage to win even a simple majority. Two days later, the SEC and CFTC began writing rules on their own. The question for investors in Coinbase (COIN), Robinhood (HOOD), and Circle Internet Group (CRCL) is whether any of that actually helps them.
The short answer is: not much, and possibly the opposite.
The Business
Coinbase is the dominant U.S. crypto exchange by regulated volume. Robinhood handles retail crypto trading alongside its brokerage business, giving it some insulation from pure-crypto swings. Circle is the issuer of USDC, the second-largest stablecoin, and its revenue is deeply tied to interest rates and the size of USDC in circulation. Total revenue at Circle increased 63.86% year over year in 2025, which is why analysts remain broadly constructive on the name. All three stocks were built on the premise that federal clarity was coming. It didn’t.
Why Wall Street Is Paying Attention
Just two days after the failed Senate vote, the SEC and CFTC started moving to build as much of the regulatory rulebook for the crypto industry as their existing authority permits. The SEC expanded its crypto rulebook under existing authority, issuing an order that created a temporary pathway for trading certain tokenized stocks, inching financial markets closer to 24/7 trading. The CFTC sent a crypto market proposal to the White House for review, though details of the proposed rules remain undisclosed.
That sounds like progress. Coinbase CEO Brian Armstrong called the vote “stunning” and wrote, “we can’t wait on Congress anymore.” The agencies are moving. The problem is where they are moving from.
What’s Driving the Opportunity
Agency rulemaking can be reversed by a future administration or challenged in court, a constraint the CLARITY Act was written to remove. JPMorgan analysts said agency rules are less durable than legislation because a future commission or a court can revise or overturn them. Every rule the SEC or CFTC writes today is one executive order or one circuit court ruling away from being unwound. COIN closed at $195.11 last Friday. CRCL closed at $88.95. Both stocks were down roughly 1.7% in premarket trading this morning. The market is not pricing in regulatory fragility at these levels.
What Could Go Wrong
The state attorneys general fight is the part most investors are underweighting. New York Attorney General Letitia James led a bipartisan coalition of 18 attorneys general in opposing the CLARITY Act, warning in a letter to Senate Banking leaders that it would jeopardize their ability to protect investors from digital cryptocurrency fraud and scams. Their objection was not simply political: the officials argued that unclear limits could create opportunities for defendants to challenge state actions on federal preemption grounds, potentially delaying investigations or prosecutions while courts determine which level of government has jurisdiction.
With no federal statute in place, that fight does not go away. It intensifies. Every state with an active AG can pursue its own enforcement theory against exchanges operating in its borders. The vote has sharply narrowed the window for market structure legislation this year, and with midterms weeks away, the realistic prospect of another floor vote this year is close to zero. That leaves COIN, HOOD, and CRCL in a patchwork enforcement environment that 18 state prosecutors just signaled they intend to use aggressively.
The Bottom Line
Agency rulemaking gives crypto exchanges a working framework, not a durable one. The SEC’s tokenized stock pathway and the CFTC’s forthcoming proposal are real developments, but the Senate’s failure to advance the CLARITY Act left firms reliant on agency rules that future administrations could reverse. Meanwhile, a bipartisan bloc of state prosecutors has made explicit that they view the absence of federal preemption as an invitation, not a ceiling. None of these stocks is uninvestable. But any investor buying COIN or CRCL today is not buying regulated certainty; they are buying the belief that 50 state enforcement regimes and two agencies writing temporary rules add up to something durable. That is a thesis, not a fact.
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