By Hannah Lang
May 14 (Reuters) – The Republican-led Senate Banking Committee on Thursday is set to consider long-awaited legislation that would create regulations for cryptocurrencies – a landmark step for the bill which has been bogged down by a dispute between crypto companies and banks.
The Clarity Act would clarify regulators’ jurisdiction over the sector. Thursday’s “mark-up,” when senators debate, amend and vote on whether to advance the bill, will indicate if it can win the at least seven Democratic votes needed to pass the full Senate.
Many Democrats are against the bill, arguing its anti-money laundering provisions are too weak and that it should bar political officials from profiting from crypto ventures. The Committee’s top Democrat Elizabeth Warren has said it will put national security and the entire financial system at risk.
“If the bill passes the committee on a party-line vote, then the bill’s prospects will be weak. If one or two Democrats cross the aisle … then it would have a fighting chance of passing this year,” Brian Gardner, chief Washington policy strategist at Stifel, wrote in a note.
‘IT’S TAKEN YEARS’
The crypto industry has pushed aggressively for the legislation, saying it is critical for the future of U.S. digital assets and necessary to fix core problems for crypto companies. Among other things, the bill would define when crypto tokens are securities, commodities or otherwise, giving the industry what it says is much-needed legal clarity that should help boost digital asset adoption.
The industry spent more than $119 million backing pro-crypto candidates in 2024 hoping to advance the Clarity Act and a separate bill paving the way for wider adoption of dollar-backed tokens known as stablecoins, which became law last year.
“It’s taken years of work to get to this point,” said Miller Whitehouse-Levine, CEO of the Solana Policy Institute, which advocates for policies to advance digital asset technology.
Banks are fighting a key provision in the bill, arguing that it will create competition for deposits by giving crypto companies too much leeway to offer rewards on stablecoins. Bank trade groups launched a last-ditch effort to peel off committee Republicans, with the American Bankers Association on Sunday publicly calling for its member CEOs to push committee senators to tighten the stablecoin language.
It is unclear if they will succeed. A senior White House official, who asked not to be named discussing private deliberations, said they expect all of the committee’s Republicans to vote in favor of advancing the bill.
Trump, who courted crypto cash on the campaign trail and whose family has profited from its own token, has prioritized crypto reform during his second administration and the White House has been pushing hard for the bill, Reuters reported.
The House passed its version of the Clarity Act last year. If the Senate fails to pass the bill this year, when November midterm elections could see Democrats take the House, it is unlikely to become law in the foreseeable future, say analysts.
(Reporting by Hannah Lang in New York; editing by Michelle Price and Nick Zieminski)
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