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DOA: CLARITY Act Torched By Senate Vote, Technocrats Are Livid But Not Deterred
The Senate on Tuesday failed to advance the Digital Asset Market Clarity Act, falling short of the 60 votes needed to invoke cloture on the motion to proceed to H.R. 3633. The vote, held at about 2:15 p.m. ET, was the first floor test of comprehensive crypto market-structure legislation in the chamber. It was not a vote on final passage. It was a vote on whether debate could even begin. The answer was no, with 50 no votes and 49 yes votes.
Every Democrat voted against the measure. Three Republicans β Sens. Susan Collins of Maine, Josh Hawley of Missouri and Jerry Moran of Kansas β also voted against the measure
The Clarity Act is the market-structure half of the crypto legal framework Congress began building last year, the companion to the GENIUS Actβs stablecoin rules. It draws the line between digital assets regulated as commodities under the CFTC and those regulated as securities under the SEC, puts spot trading platforms under a federal registration regime for the first time, and sets statutory terms for self-custody, noncustodial software and rewards on stablecoin balances. It cleared the House last July with 78 Democrats and then spent a year in Senate rewrites.
That result effectively freezes the bill in place with almost no calendar left before the midterms. Republicans control 53 seats. They needed at least seven Democrats, and more if GOP holdouts peeled off over bank or law-enforcement concerns. They did not get them.
The House passed its version 294-134 in July 2025. The Senate Banking Committee reported a version 15-9 in May 2026, with Democrats Ruben Gallego of Arizona and Angela Alsobrooks of Maryland joining Republicans. Tuesday was supposed to be the moment those committee crossovers turned into a floor coalition. Both Gallego and Alsobrooks voted no on cloture. Instead, the first hurdle became the last one of 2026.
BREAKING: πΊπΈ The Crypto CLARITY Act has failed to pass the Senate cloture vote. pic.twitter.com/0VAw1H9Eyl
β Bull Theory (@BullTheoryio) September 15, 2026
Aaaaand, Bitcoin isnβt happy.
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How the deal collapsed in 48 hours
Senate Republicans released what they called their βlast, best and finalβ text Sunday night. Sens. Cynthia Lummis of Wyoming, Banking Chair Tim Scott of South Carolina, and Agriculture Chair John Boozman of Arkansas said the draft folded in 126 substantive changes requested by Democrats. The package included new ethics language modeled on a Tillis-Gallego proposal, edits to the Blockchain Regulatory Certainty Act for noncustodial developers, Agriculture Committee guardrails on affiliate trading and tribal gaming, and a Treasury βcircuit breakerβ meant to address bank fears that stablecoin yield would drain community-bank deposits.
Lummisβs line was blunt: Democrats got what they wanted; now take yes for an answer.
Democrats did not. Late Monday they sent a counteroffer. According to people familiar with it, they did not reopen the stablecoin-yield fight β sources had described that as a βRepublican-onlyβ problem β but they did demand more on ethics (large holdings, dependent children, paid crypto promotions), a narrower BRCA that expressly does not modify criminal law, and tighter Ag-title rules on exchanges and conflicts. Sens. Mark Warner of Virginia, Ruben Gallego of Arizona, and Raphael Warnock of Georgia said the White House-approved ethics language still needed work. Sen. Elizabeth Warren of Massachusetts went further, arguing the enforcement design left the Trump administration too much control and left loopholes around existing presidential crypto interests.
Republicans rejected the counteroffer Tuesday morning. βIn response to a significant step in their direction, Democrats have chosen to move the goalposts again,β Senate Banking Committee spokesman Jeff Naft said. βYet we are hearing the same unreasonable asks and the same refusal to take yes for an answer. The final text is public.β Lummisβs office said the Democratic paper βlooks identical to their opening position at the start of recess.β
White House Crypto Council Executive Director Patrick Witt had already signaled there was little room left. βIf there are any changes, weβre talking about punctuation at this point or technical changes,β he told Crypto In America on Monday. βI view that as definitely a best and final offer.β
Three fights that never closed
Ethics. This was the political core. Democrats wanted restrictions on large crypto holdings by the president, vice president, members of Congress, judges, and family, plus limits on paid promotions. Republicans added language they said tracked the Tillis-Gallego framework and gave state attorneys general a role in enforcement. Critics said it still left gaps around existing ventures tied to the Trump family and put too much enforcement discretion in the Justice Department. Warren and others treated that as disqualifying. The Democrats who had spent months negotiating the bill, Kirsten Gillibrand, Mark Warner, Cory Booker, Raphael Warnock, Ruben Gallego, Angela Alsobrooks and Catherine Cortez Masto, all voted no, according to Crypto In Americaβs Eleanor Terrett.
Developer protections and DeFi. The BRCA language was meant to shield noncustodial software developers from money-transmitter registration. Sen. Catherine Cortez Masto of Nevada has been the Democratic face of that fight. Republicans already stripped explicit criminal safe harbors to satisfy her. Her camp still wanted the provision narrowed and a sentence stating that nothing in it changes criminal law. Industry and GOP negotiators called that a second move of the goalposts.
Banks and stablecoin yield. Eight banking trade groups, including the American Bankers Association and the Independent Community Bankers of America, attacked the new circuit breaker as βnot a safeguard at allβ because it would fire only after deposits had already left. They wanted tighter bans on interest-like payments on stablecoin balances. The White House Council of Economic Advisers published a tool arguing there is βno meaningful relationship between stablecoin growth and community bank deposit flight.β Witt accused the banks of acting in bad faith: βIf you oppose the Clarity Act because you just hate crypto, thatβs fine. Just say that.β
That bank fight mattered inside the GOP. Sen. John Curtis of Utah said he would vote to proceed but was a no on final passage. Sens. John Cornyn of Texas and Susan Collins of Maine β Collins called the bill a βmoving targetβ and flagged community-bank deposits β were publicly undecided going into the vote. Sens. Rand Paul of Kentucky and Josh Hawley of Missouri were widely expected to oppose the bill on substance. Mitch McConnell of Kentucky returned to the floor Monday after a three-month absence and said he would βdo my best to be present for tough votes.β Presence was not the same as 60 votes.
What the bill would have done
Clarity is market-structure legislation, the sequel to last yearβs GENIUS Act on stablecoins. It would split digital-asset oversight between the SEC and the CFTC, keep securities law from being skirted by labeling tokens as something else, set rules for trading platforms, and try to write a statutory floor under self-custody and noncustodial development. Supporters at BlackRock, Fidelity, Schwab, Goldman, and Coinbase argued the alternative is agency-by-agency enforcement with no durable statute. Opponents argued the draft under-regulated conflicts, illicit finance, and bank-deposit competition.
Majority Leader John Thune framed Tuesday as the βnext logical stepβ after GENIUS. Scott called it the day βeveryone [had] to put their cards on the table.β They did. The table did not have 60 cards on it.
Cloture on a motion to proceed is not a funeral by Senate rules. Leadership can file again. Amendments can be rewritten. A lame-duck session still exists on paper.
The calendar does not. The House has already canceled late-September weeks. The Senate has a short September window, then October campaign recess, then a post-election lame duck that will be defined by midterm results. Prediction markets had already repriced the bill before the roll call: passage-this-year contracts on Polymarket and Kalshi ran between the high teens and the mid-30s in the hours before the vote, depending on the platform and the hour. Analysts at TD Cowen and Capital Alpha had the full-year odds in the same neighborhood.
If the 119th Congress does not pass Clarity, the next Congress writes a new bill. Agencies keep making policy by enforcement and rulemaking. The industry stays in the gap between a House-passed statute and a Senate that could not open debate.
Witt said Monday that whether the bill got 60 votes would be βa political calculation, not a policy calculation.β Tuesday proved him right. The policy text was 600-plus pages and a year of talks. The politics were ethics, banks, and a midterm clock. The politics won.
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LinkedIn fights for the right to tell customers when the feds want their data
Microsoftβs top lawyer argued Tuesday that legislators βmust make secrecy [orders] the exceptionβ in government subpoenas demanding information about LinkedIn users.
LinkedIn, which is owned by Microsoft, is fighting what it calls overly broad subpoena demands from the US government, which sometimes come with secrecy orders that prevent LinkedIn from alerting customers whose information is being requested.
The company is asking federal courts βto enforce meaningful limits on both the scope of government demands and the secrecy that can accompany them,β wrote Jon Palmer, Microsoftβs chief legal officer, in a Tuesday blog post. βWe recognize law enforcementβs important role in protecting public safety and investigating crime, and sometimes that does need to be done covertly. At the same time, customers and users deserve meaningful limits and independent oversight through an adversarial process.β
He pointed out: βPeople and organizations increasingly entrust their most sensitive information to online services. If providers cannot challenge demands they know are overbroadβor if courts may silence them without a rigorous, adversarial reviewβthe safeguards the law requires will be weakened precisely when they are most needed.β
A tricky issue
The issue is a tricky one. Law enforcement often use this type of subpoena as an investigative tool, seeking those who are engaged in illegal activities. The theoretical justification for secrecy is to avoid alerting the investigative target to make it less likely the suspect will try to destroy evidence or flee the jurisdiction.
Government lawyers are supposed to only make secrecy requests when absolutely essential. Microsoft is suggesting that courts and congress need to step in to curtail blanket government efforts.Β
βThe Fourth Amendment protects the right to be free from unreasonable searches and seizures. That right applies to papers kept in a desk and it also applies when personal and business records are stored online,β Palmer wrote. βOnline service providers, like LinkedIn and Microsoft, also have a First Amendment right to speak to their customers when the government obtains an order to search their private information. Secrecy may sometimes be justified, but it should be tailored to demonstrated needs and subject to meaningful review.β
He added: βThe government must seek only relevant information, justify secrecy with specific evidence and infringe on speech to the least extent possible.β In his post, he pointed to a recent legislative effort in the US House of Representatives that might mitigate the issue if it ends up becoming law.Β
βOn August 31, the House passed legislation to rein in secret surveillance and strengthen notice protections when the government seeks data held by technology providers,β he wrote. βThe reforms would place clearer limits on secrecy orders, require greater accountability, and help ensure that secrecy is the exception β not the rule. The Senate should act promptly to send these historic reforms to the President.β
LinkedIn privacy battles
LinkedIn itself is currently fighting litigation that accuses it of directly violating the privacy rights of its customers, and a federal judge this month dismissed another similar case, but gave plaintiffs permission to refile, with a caveat.
βGiven LinkedInβs further arguments that users voluntarily download browser extensions, which by their nature intentionally expose data to websites, it seems unlikely that the plaintiffs will ever be able to allege a privacy violation, much less prevail at the end of the day,β US District Court Judge Vince Chhabria wrote. βBut in an abundance of caution, dismissal is with leave to amend.β
But, he added, if the amended complaint isnβt filed within 14 days, βdismissal will be with prejudice.β
Privacy now a βdata stewardship obligationβ
Jeff Valdes, a director at Acceligence, noted, βthere is definitely some irony here.β
βIf Microsoft wants customers to view it as a steward of their privacy when the government comes asking for their information, customers are naturally going to apply that same standard to how Microsoft and LinkedIn collect, use, protect, and disclose information themselves,β he said. βPrivacy is difficult to compartmentalize. You cannot have one philosophy of customer privacy for government access, another for product design, and another for your own commercial data practices without eventually creating a credibility problem.β
Mike Wilkes, enterprise CISO at Aikido Security, agreed, pointing out, βwithout meaningful limits, judicial scrutiny, and an expiration mechanism, a temporary investigative necessity starts looking a lot like a permanent architecture for invisible surveillance. The individual may never have an opportunity to challenge the scope of the request, because they may never even know the request existed until prosecutors show up with an indictment.β
That, he said, βis why Microsoftβs argument matters, despite the obvious irony of LinkedIn simultaneously defending itself against privacy claims from its own users.β
But Ryan OβLeary, an IDC research director, offered a different perspective.
βMicrosoft makes no bones about using the data contained within its own systems for its own purposes. Both things can be true: Microsoft can fight for the privacy of its platform while still not necessarily respecting the privacy rights of its end users,β OβLeary noted. βThis seems to come down to protecting its own proprietary data sets, not some altruistic privacy crusade.β
Β At the same time, Valdes pointed out, Palmerβs post highlights how deeply privacy has become a top-tier enterprise IT priority.
βPrivacy is rapidly becoming a much broader data stewardship obligation,β he said. βCompanies holding sensitive information increasingly have to think simultaneously about government requests, third-party access, their own collection practices, AI use, data retention and what they tell customers about all of it. If you want to be trusted as the custodian of the worldβs data, customers are going to judge how you protect that data in every direction.β
However, Wilkes noted, βMicrosoft does not need to be a perfect privacy saint to be right about this particular problem.β
This article originally appeared on CSOonline.

A.I. Risks Split Silicon Valley and Washington
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Β© Al Drago for The New York Times
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The post Reform Council Hires Private Security Guards to Counter Male Migrants Who Make Town Centre a βNo-Goβ Zone for Women appeared first on The Daily Sceptic.
Alex Bores Wants Democrats to Make AI Safety a 2028 Election Issue
What Is Driving Diesel Prices Up? Energy Chaos Caused by Two Wars.

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- No Rolling Power Outages for California Since 2020 - Thanks to 17,000 MW of New Battery Storage
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Read more of this story at Slashdot.
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- Court Strikes Down Trump Order to Keep an Aging Coal-Burning Plant Running
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Β© JuliΓ‘n Trejo Bax/Associated Press
Fears of βJobs Bloodbathβ as Burnham Launches Huge βTourist Taxβ Raid
Hospitality businesses are warning of a jobs bloodbath as Andy Burnham launches a huge 'tourist tax' raid, with England's mayors and local councils given new powers to impose uncapped levies on overnight stays.
The post Fears of βJobs Bloodbathβ as Burnham Launches Huge βTourist Taxβ Raid appeared first on The Daily Sceptic.