Here’s Where the Crypto Bill Stands

After months of dramatic back-and-forth, crypto’s long-desired market structure bill is set for a do-or-die vote on the Senate Banking Committee this Thursday.

Several battles regarding key language in the legislation remain unresolved—but crypto policy leaders are increasingly confident they may be able to get the bill passed at the buzzer, before Congress grinds to a halt this summer in anticipation of November’s midterm elections.

The bill, dubbed the Clarity Act, would formally legalize most crypto activity in the United States. Its passage has been a top wishlist item for industry leaders for half a decade.

Here’s where the crucial debates regarding the Clarity Act currently stand, and what that state of play means for Thursday’s vote.

Stablecoin Rewards

One of the flashiest battles dominating the Clarity Act’s negotiation has pitted the crypto industry against the traditional banking lobby. Banks want to add language to the bill banning crypto firms like Coinbase from offering yield on stablecoins—cryptocurrencies pegged to the value of the U.S. dollar. National and community banks alike fear that stablecoin rewards could diminish reliance on traditional, low-yield savings accounts.

Crypto firms, meanwhile, claim such programs were legalized in last year’s stablecoin-focused GENIUS Act, and should remain broadly available to customers. In January, the day before the Senate Banking Committee was originally set to hold a vote on the Clarity Act, Coinbase walked away from the bill, citing concerns that banks might get their desired stablecoin yield restrictions added to the bill.

Earlier this month, two senators on the Banking Committee—Thom Tillis (R-NC) and Angela Alsobrooks (D-MD)—unveiled a supposed compromise on the issue, which restricts stablecoin rewards in some circumstances, but permits it in others. While crypto leaders voiced support for the compromise, banks slammed it on Friday, arguing it contains numerous loopholes.

Now, bank leaders are gearing up for a full-court press to express their displeasure with the proposed language. On Sunday, the CEO of the American Bankers Association, a powerful industry trade group, sent a letter to member banks urging them to lodge protests with their senators before Thursday’s Clarity Act vote.

“We believe that committee members may not be fully aware of the risks to the economy posed by the stablecoin loophole,” the letter, seen by Decrypt, said. “Your immediate engagement can make a difference.”

But it’s unclear whether those complaints will move the needle at this point. A spokesperson for Angela Alsobrooks told Decrypt that the senator, typically an advocate for the banking industry, still stands by a joint statement she made with Sen. Tillis earlier this month, in which the lawmakers said they “respectfully agree to disagree” with the banks about stablecoin yield at this point.

Ethics

One of the biggest question marks hanging over the Clarity Act is potential language in the bill restricting the ability of public officials to launch and promote their own crypto products while in office. The White House has long balked at language prohibiting President Donald Trump’s numerous crypto ventures, while Senate Democrats have increasingly framed such a ban as essential.

The debate over ethics language in the Clarity Act has recently focused on whether the matter should be considered at this week’s Senate Banking Committee markup, or later in the process, during a final vote on the Senate floor. Senate Banking Chairman Tim Scott (R-SC) has argued bill language regarding ethics falls outside his committee’s jurisdiction, and thus cannot be considered until the bill passes out of the Banking Committee and onto the Senate floor.

But Democrats have started pushing back on that claim. Pro-crypto Democrats on the Banking Committee, including Sen. Ruben Gallego (D-AZ), have said in recent weeks they may vote against the Clarity Act at markup if Scott prevents ethics language from being added to the bill, according to Politico.

“There are growing concerns amongst Democrats that if ethics is not included in the bill that is marked up in the Banking Committee, it will not be included at all,” a Senate staffer familiar with the matter told Decrypt.

Corey Frayer, a consumer advocate who previously worked as a staffer on the Senate Banking Committee, told Decrypt that Republican efforts to block ethics language from Thursday’s markup are intended to sidestep a sensitive issue that could torpedo the Clarity Act’s chances of passage.

“Nothing about Senate process prevents including ethics language in the bill,” Frayer said. “If process was a real concern, they could send the bill to a second committee after the Banking vote, but we all know they won’t.”

If all 11 Democrats on the Banking Committee vote against the Clarity Act on Thursday, the bill could still pass—narrowly—on party lines. But crypto leaders concede the outcome would not be ideal, given the Clarity Act will need at least seven Democrat votes to pass on the floor, and a partisan committee vote could hamper the bill’s ability to garner support from both parties.

“Bipartisan agreement during markup makes life much easier for everyone,” one crypto policy leader told Decrypt.

The policy leader added, though, that a party-line vote on Thursday would not, in their view, kill the bill’s ultimate chances of passage.

Another D.C. insider told Decrypt the likeliest path for the Clarity Act to passage would see the bill’s ethics language debated on the floor, not at the committee level. Thus, they said, a partisan vote on Thursday would be “not fatal.”

DeFi Protections

The third contentious issue defining negotiations over the Senate’s crypto bill has pertained to the Blockchain Regulatory Certainty Act (BRCA), a bill protecting developers of decentralized crypto software that was attached to the Clarity Act in the fall.

The bill would, among other things, exempt developers of crypto privacy tools from being criminally prosecuted as illegal money transmitters. In the last year, the Department of Justice has secured convictions against several crypto developers under the anti-money laundering law.

Those protections have raised alarm bells for certain national security-focused Senate Republicans including Sen. Chuck Grassley (R-IA)—as well as aligned Senate Democrats on the Banking Committee including Catherine Cortez Mastro (D-NV).

On Monday, though, Sen. Cynthia Lummis (R-WY)—one of the most avid backers of the Clarity Act—announced she had reached a deal with Grassley regarding the BRCA.

A source familiar with the compromise told Decrypt it would see a sentence added to the BRCA portion of the Clarity Act, clarifying the level of intent required to be considered an illegal money transmitter.

The deal has received the blessing of DeFi advocates, sources familiar with the matter told Decrypt. That means the Clarity Act appears to have healed fractures within the GOP that could have posed problems during a later floor vote. It’s yet unclear, though, if the compromise will manage to attract Democrats to vote for the bill at Thursday’s crucial committee meeting.