The United States has moved closer once again to creating comprehensive rules for the cryptocurrency market. The Senate Banking Committee has approved the advancement of the long-awaited bill called the CLARITY Act to the next phase of the legislative process. If the bill passes the full Senate and subsequently the House of Representatives, it could significantly change the functioning of the cryptocurrency industry in the U.S. – and indirectly in the rest of the world as well.
The bill, which aims to provide a clearer regulatory framework for digital assets, was supported by all 13 Republican committee members and also two Democrats. Nine Democratic senators voted against it.
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CLARITY Act to Bring “Clear Rules” for Cryptocurrencies
The debate around cryptocurrencies in the United States has been revolving around the same problem for several years: companies and investors often don’t know whether certain digital tokens fall under the oversight of the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). It is precisely this uncertainty that the CLARITY Act aims to eliminate.
Banking Committee Chairman Tim Scott stated at the opening of the session that the goal of the bill is to protect consumers, promote innovation in the United States, and simultaneously strengthen national security in connection with digital assets.
However, according to critics, the bill favors the crypto industry itself too much. Democratic Senator Elizabeth Warren called the law legislation “written by the crypto industry for the crypto industry.” She also accused Republicans of helping American President Donald Trump and his “crypto business.”
On the other hand, Republican Senator Cynthia Lummis, who is among the biggest supporters of cryptocurrencies in Congress, rejected the criticism, arguing that it is a law supporting consumer protection and the work of law enforcement agencies.
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More Than One Hundred Amendments
The deliberations on the CLARITY Act were extraordinarily contentious. Senators submitted more than one hundred amendments covering very different topics – from stablecoins and money laundering to ethical rules for politicians.
Elizabeth Warren, for example, proposed measures against so-called “tokenization loopholes,” or potential gaps in the law that companies could exploit. She also mentioned reports that Iran allegedly uses cryptocurrencies to circumvent sanctions and collect fees from ships passing through the Strait of Hormuz.
Cynthia Lummis responded that the bill already contains rules focused on regulating cryptocurrency mixers, tools used to anonymize transactions. Warren’s proposals ultimately did not pass.
Warren’s proposal concerning the late financier Jeffrey Epstein also sparked controversy, as she labeled him an “early supporter of cryptocurrencies.” She demanded that banking regulators disclose additional information regarding his financial activities. Republicans rejected the proposal as unrelated to digital assets.
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Democrats Wanted Stricter Rules
Several Democratic senators attempted to push through tougher rules for the cryptocurrency sector. Senator Catherine Cortez Masto proposed strengthening law enforcement powers in cryptocurrency cases, but the proposal did not pass.
Senator Tina Smith wanted to ban potential future bailouts of crypto companies with public funds in the event of another market collapse. She described the proposal as a preventive measure against extreme cryptocurrency volatility. This proposal also failed to gain Republican support.
Donald Trump’s potential conflicts of interest in the crypto industry were also a major theme. Democratic Senator Chris Van Hollen pointed out Trump’s ties to the World Liberty Financial project and also to memecoins associated with his name.
“The people who are directly creating these rules, from the president to Congress, should not be issuers of these assets and tokens,” Van Hollen stated during the session.
However, Republicans rejected his proposal and labeled it as personal attacks on the president.
What Will Follow?
The CLARITY Act will now head to a vote in the full Senate. For the bill to pass, it will need at least 60 votes. If it succeeds, it will still need approval in the House of Representatives.
According to Kristin Smith from the Solana Policy Institute, it is likely that if the Senate passes a compromise version of the bill with sufficient support, the House of Representatives will adopt the same version of the bill without major changes. That would pave the way for the president’s signature.
For the cryptocurrency sector, this would be one of the most significant regulatory moments in recent years. The United States has so far lacked a unified framework for the functioning of the digital asset market. The outcome of the vote could therefore significantly affect not only American crypto companies, but also global investors and other countries that are still preparing similar rules.
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