The US Senate may move forward this week with the CLARITY Act, which aims to create a regulatory framework for the cryptocurrency market. However, the 60-vote threshold required to formally proceed with the bill’s consideration remains the biggest obstacle for Republicans.
Senate Republicans plan to move the CLARITY Act forward before the legislative recess in August. Senate Majority Leader John Thune reportedly aims to initiate the process this week.
According to the Senate agenda, Republicans can first hold a procedural vote to end the debate and proceed with the bill’s consideration. This step requires the support of at least 60 senators. Given the current number of Republican seats, securing support from Democratic senators is crucial for the bill to move forward.
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Seven Democratic senators had previously stated that the final version of the CLARITY Act was still “inadequate” in areas such as ethics guidelines, combating illicit financing, and preventing conflicts of interest. Republicans are reportedly negotiating with Democrats on these provisions in an effort to increase bipartisan support.
However, there is some uncertainty within the Republican Party itself. Given the Republicans’ limited majority in the Senate and Mitch McConnell’s unlikely participation in the vote, every vote is considered crucial. The stances of Republican senators like Josh Hawley and Rand Paul, who previously opposed the GENIUS Act, are also being closely watched regarding the CLARITY Act.
The primary goal of the CLARITY Act is to create clearer rules regarding which assets and activities in the cryptocurrency market fall under the supervision of the U.S. Securities and Exchange Commission (SEC) and which fall under the supervision of the Commodity Futures Trading Commission (CFTC).
On the other hand, SEC member Hester Peirce warned that moving traditional financial products to the blockchain does not automatically exempt these products from securities regulations.
Peirce stated that some crypto “vault” products, managed by third parties and intended to provide returns to users, could be considered mutual funds and therefore subject to securities laws.
Peirce noted that the SEC doesn’t directly regulate code written by developers, and said companies shouldn’t assume that different regulatory rules will apply simply because they’re moving their operations off-chain.
*This is not investment advice.
