Editor's Note: On May 14th, at 10:30 AM Eastern Time (10:30 PM Beijing Time) today, the U.S. Senate Banking Committee will conduct a committee review of the "Cryptocurrency Market Structure Act" (known as the CLARITY Act). This is a critical step in the legislative process. If passed, the CLARITY Act will advance to a full Senate vote.
The committee's official website shows that this Executive Session has been scheduled on the agenda. Previously, Senate Banking Committee Chairman Tim Scott, along with Cynthia Lummis and Thom Tillis, released the latest version of the market structure bill text on May 12th. They stated its goal is to provide "clear rules" for digital assets, protect ordinary investors, combat illicit financial activities, and keep financial innovation within the United States.
This article is from Fortune, focusing on the political maneuvers on the eve of the CLARITY Act's review by the Senate Banking Committee. The most noteworthy aspect is not whether the bill is "pro-crypto," but how, as it nears passage, it exposes three key tensions in U.S. crypto regulation: First, whether stablecoin yields are payment incentives or de facto deposit competition; Second, whether the crypto market structure legislation is protecting investors or opening an institutional pathway for industry expansion; Third, given the deep involvement of the Trump family in crypto businesses, whether ethical constraints must be simultaneously incorporated into the market structure reforms.
From the current situation, the CLARITY Act still has a relatively good chance of entering a full Senate vote, but its margin for error is narrowing. Fortune reports that members of the Senate Banking Committee have already submitted over 130 amendments before the review, with Elizabeth Warren alone proposing 44. Meanwhile, the banking industry is concerned that stablecoin reward mechanisms could siphon off bank deposits and has sent a large number of opposition letters to Senate offices.
Although the key Republican swing vote John Kennedy has indicated a tendency to support it, and the chance of the bill entering full Senate consideration remains high, with the summer recess and midterm elections approaching, the window for the CLARITY Act's passage is narrowing. Prediction markets have also lowered its probability of passing this year to about 60%.
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The CLARITY Act is a landmark bill aimed at establishing a regulatory framework for the U.S. crypto industry. The bill will begin its markup review process in a Senate committee starting Thursday. Its passing prospects have boosted investor sentiment, but there remain several significant hurdles to cross before Congress can send the bill to President Trump's desk.
CLARITY is short for the "Digital Asset Market Clarity Act." The bill passed the House of Representatives last year but encountered resistance in the Senate Banking Committee due to disputes between banks and stablecoin companies over whether and when rewards can be paid on stablecoin balances. Now, as senators prepare to propose amendments, Democrats are pushing to include ethical constraint clauses related to the Trump family's crypto businesses.
According to a copy of proposed amendments reviewed by Fortune, members of the Senate Banking Committee have submitted over 130 proposed amendments ahead of Thursday's markup, with Senator Elizabeth Warren alone submitting 44.
Some of the proposed amendments are minor, but others aim to advance the positions of the bill's opponents. These opponents include banking interests concerned that stablecoins could weaken the deposit base of banks, as well as those worried about ethical and national security risks accompanying the crypto industry's expansion.
"I think it will pass, based on the progress made in both chambers of Congress so far and the White House's support for this bill," Steve Yelderman, general counsel for the Ethereum-focused initiative Etherealize, told Fortune. "Having said that, this is Washington, and anything can happen."
Earlier this year, the CLARITY Act came close to entering a Senate Banking Committee markup, but Coinbase withdrew its support for the bill over a proposed ban on stablecoin rewards. Since then, Senator Thom Tillis (R-N.C.) and Senator Angela Alsobrooks (D-Md.) reached an agreement on the stablecoin yield issue. However, banking lobbying groups now complain that this compromise is too friendly to stablecoin companies. Reportedly, members of the American Bankers Association have sent over 8,000 letters to Senate offices criticizing this yield compromise.
A Senate aide told Fortune that during tomorrow's markup, Senate Banking Committee Chairman Tim Scott (R-S.C.) is expected to emphasize protecting "ordinary people," safeguarding national security, and keeping crypto innovation in the United States as the main goals of the CLARITY Act. Another Senate aide said Democrats are expected to focus on the ethical issues raised by President Trump's numerous crypto connections.
"Democrats are increasingly concerned that if ethics provisions are not included in the version of the bill marked up by the Banking Committee, they may not be included later," the staffer said. They added that Democrats are focused on addressing the issue of the Trump family profiting from cryptocurrencies within the market structure legislation. Republicans and Democrats have met several times this week to discuss how to add ethics clauses to the CLARITY Act.
For now, the bill's chances of reaching a full Senate vote remain significant. A key Republican who had previously been hesitant about the CLARITY Act in the Banking Committee, Senator John Kennedy of Louisiana, told Semafor he plans to support the bill. However, with the summer recess and midterm elections approaching, the margin for error for the CLARITY Act remains quite limited. Traders on Polymarket have become less optimistic about the bill's prospects this week. The prediction market currently puts the probability of the bill passing this year at 60%.
