Senate Advances Landmark Clarity Act With Bipartisan Support

The U.S. Senate Banking Committee has voted 15-9 to advance the long-awaited crypto legislation out of committee and on to the full Senate.

On Thursday, the Republican-led Committee convened at the Dirksen Senate Office Building in Washington, D.C., to mark up the Clarity Act, a landmark bill that would establish the first comprehensive federal framework for the digital asset market. This session came after months of negotiations over how to regulate stablecoins, crypto assets, tokenized products, and decentralized finance (DeFi).

Senate Banking Committee Chairman Tim Scott (R-S.C.) opened the session by talking about how “for years, the digital frontier was trapped in a regulatory gray zone,” and from developers to investors, everyone was left with uncertainty, facing “confusion and enforcement actions when instead the government should have been crafting clear rules of the road.”

The crypto industry is now one step closer to getting that clarity.

“I’ve been in negotiations for over nine months,” said Democratic Senator Angela Alsobrooks, who voted in favor of advancing the bill, during which the members “worked toward regulating digital assets in a way that protects consumers and reduces the risk of deposit flight while still allowing innovation to happen.”

The success at the markup, however, is by no means the end of the legislative process, but it was a critical procedural step that allowed senators to debate amendments, revise key provisions, and vote on whether the updated bill advances out of committee. The bill is now heading to the Senate floor, where it requires 60 votes to pass.

This early caused prices to rally, with Bitcoin surging to almost $82,000 while Ethereum went past $2,300, sending the total cryptocurrency market cap above $2.8 trillion.

A Flood of Amendments Test Bipartisan Unity

Just the day before the markup vote, the committee members filed over 100 amendments to the Act. The latest changes came the day after the committee released the new draft, which was 309 pages long, expanding from the 278-page version released in January, when over 130 amendments were filed by committee members.

Most of the latest revisions are suggested by Democrats on the Banking Committee, with only a handful of modifications coming from the bill’s Republican sponsors.

Many Democrats oppose the bill because they find its anti-money laundering (AML) provisions too weak. They also want political officials to be banned from profiting from crypto ventures, and one such amendment was proposed by Senator Chris Van Hollen, which prevents “conflict of interest” and “requires greater transparency,” but failed in an 11-13 vote.

Meanwhile, Senator Elizabeth Warren, D-Mass., one of the most vocal critics of the crypto industry, has been so opposed to the bill that she alone has submitted more than 40 proposals.

According to her, the bill will put national security and the financial system at risk. In her opening remarks on Thursday, she said the legislation “is just not ready.”

“Right now American families all across this country are struggling,” noted Warren, pointing to the rising costs of groceries, utilities, and health care. “We could be working right now on changes in the law that would help bring down prices and help unrig our economy,” she continued, adding, “​​But instead of that, we’re spending our time working on a bill written by the crypto industry for the crypto industry.”

Among her amendments, keeping “risky assets out of retirement accounts” failed to get the votes to be adopted. Her proposal to address sanctions authority in the legislation and remove three sections addressing some bank activity around crypto both failed with 11-13 votes, the same as the previous one.

“We need to fix the hole in our sanctions authority and crack down on crypto money laundering,” said Warren, and talked about the sanctioning of Tornado Cash, which she said, “are designed to make it easy to launder a huge pile of money and making it hard for anyone, including our law enforcement officials, to tell where the money came from.”

Another of her failed amendments called for regulators to “release bank supervisory information” about Jeffrey Epstein, who “was an early backer of crypto” and “poured millions of dollars into Coinbase, one of the biggest benefactors of this bill, if it becomes law.” Epstein, Warren said, “recognized crypto’s potential as a tool to covertly facilitate illicit payments.”

Meanwhile, Wyoming’s Republican Senator Cynthia Lummis, who’s a strong advocate of Bitcoin, called the Clarity Act “the hardest piece of legislation I’ve ever worked on.”

“This is a very new commodity and security, and it takes time to craft something to address the innovation that has been brought about through blockchain technology, and that’s why it’s taken such a bipartisan effort, heavy lift, lots of negotiations, involvement from those people who are in the industry,” said Lummis.

Several amendments by Lummis received strong bipartisan support. The committee also approved the amendment to facilitate portfolio margining with a 19-6 vote, as well as sandboxes for AI tools with a 15-9 vote.

A New Rulebook for Crypto is Here

The Clarity Act is a comprehensive market structure bill that establishes a federal regulatory framework for the crypto industry. It also establishes disclosure requirements, registration routes for intermediaries, and compliance standards for market participants.

More importantly, it defines the jurisdictional boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) by setting up criteria for when a crypto asset should be treated as a commodity or a security, providing the much-needed legal clarity that should help boost crypto adoption.

Moreover, it allows regulated institutions to use digital assets for trading, payments, lending, custody, and other activities that they are already permitted to conduct. It also authorizes agencies, the SEC and CFTC, to create sandboxes for firms to test their products.

The bill further protects self-custody rights and developers and DeFi participants from federal and state securities laws for validating transactions, operating nodes, and building distributed ledger technology systems.

The Clarity Act would define when a platform is sufficiently decentralized, and if not, it would be treated as a financial institution and required to monitor transactions and report suspicious activity.

When it comes to tokenization, a trend that has grown tremendously and has captured institutional support, the bill would not exempt tokenized securities from securities laws.

Meanwhile, exchanges, dealers, and brokers are subject to customer identification, customer due diligence, and AML programs, treated as financial institutions under the Bank Secrecy Act.

The crypto industry has called the legislation critical to the future of the country’s digital asset industry and to addressing longstanding problems for crypto companies. Pushing aggressively for the bill, crypto proponents spent over $119 million backing pro-crypto candidates in 2024 to help advance ‌the ⁠Clarity Act and the Genius Act.

The Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 (GENIUS) Act created a regulatory ​framework for dollar-backed payment stablecoins and became law last year after passing the Senate by a 68-30 vote.

The bill, Coinbase CEO Brian Armstrong said in a post on X, “will benefit the American people by making the US financial system faster, cheaper and more accessible. It will also ensure that the US leads in the global race to build the next generation of our financial system.”

Earlier this year, the bill had nearly reached a markup stage when crypto exchange Coinbase withdrew support due to a proposed ban on stablecoin yield. But Senators Thom Tillis (R-N.C.) and Alsobrooks (D-Md.) recently reached a deal on the same.

Bank lobbying groups, however, have complained that the compromise supports stablecoin companies a bit too much, and American Bankers Association members reportedly sent thousands of letters to Senate offices criticizing the compromise.

The traditional financial institutions have been fighting to kill or at least severely restrict sections of the bill that would allow stablecoin issuers to offer “rewards” to consumers, arguing that this will create competition and negatively affect deposits in the regulated banking system.

But “this bill reflects serious, good-faith work across the committee and delivers the certainty, safeguards, and accountability Americans deserve,” according to Chairman Scott, who said in a statement that “it puts consumers first, combats illicit finance, cracks down on criminals and foreign adversaries and keeps the future of finance here in the United States.”

Today, the bill has hit a major procedural milestone, though it was just one stage in a long process and now faces several big hurdles ahead.

The legislation has to first be merged with the Senate Agriculture Committee’s version, and then it would move to a full floor vote. And because the House passed its version of the Clarity Act last year, which differs from the Senate bill, lawmakers must reconcile those differences and finally send the final legislation to President Donald Trump’s desk.

Only once the Clarity Act has secured the President’s signature would it create a regulatory framework for the US crypto industry, potentially boosting digital asset adoption.