The CLARITY bill has successfully passed, but the future remains a long and arduous journey

Author: Chloe, ChainCatcher

The U.S. Senate Banking Committee yesterday passed the Digital Asset Market Clarity Act (CLARITY Act) with a bipartisan vote of 15 to 9, ending a four-month stalemate on this cryptocurrency market structure bill. The key was the bipartisan support from two Democratic senators, Ruben Gallego and Angela Alsobrooks, which allowed the bill to move to the next stage, where it still needs to be merged with the version from the Agriculture Committee before being sent to the full Senate.

Following the news, the cryptocurrency market surged. Bitcoin climbed to $81,500, up about 3%, Coinbase's stock price soared over 8% during trading, Strategy rose 7%, Galaxy Digital increased by over 6%, and Circle, which had initially dropped 6%, turned positive. On the same day, the S&P 500 index first crossed 7,500 points, but the gains in cryptocurrency stocks significantly outpaced the broader market.

Core of the Bill: Ending the Jurisdictional Dispute Between SEC and CFTC

The CLARITY Act is seen as the most important legislative goal for the U.S. cryptocurrency industry in Washington. Its core purpose is to end the long-standing ambiguity regarding the jurisdiction of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over digital assets, a gray area that has caused the cryptocurrency industry to suffer from a lack of regulatory clarity for years.

Specifically, the bill will clearly define which digital assets are considered commodities and which are securities, and it will regulate the obligations of exchanges, brokers, and custodians. The bill also protects "non-custodial" software developers and blockchain validators from being classified as "money transmitters."

In the U.S., once classified as a money transmitter, entities typically have to comply with FinCEN registration, anti-money laundering, transaction record-keeping, and suspicious activity reporting obligations, and some businesses may also require state-level licenses. The controversy lies in the fact that non-custodial software developers do not actually hold or control user funds, yet they could be drawn into money transmitter liabilities in certain cases. The role of the CLARITY Act is to distinguish between centralized financial intermediaries and developers who simply provide code, establishing clearer legal boundaries for non-custodial activities.

Asheesh Birla, CEO of Evernorth, stated, "For years, U.S. blockchain entrepreneurs have been operating in a regulatory purgatory. Regulatory clarity can drive capital flow, and those institutions that have been observing this space are now one step closer to a framework they can act upon." Mari Tomunen, Chief Legal Officer of DoubleZero, pointed out the pain points in the non-custodial space: "Existing guidelines indicate that non-custodial activities should not, in principle, pose legal risks of being classified as money transmission, but some litigation theories and court rulings point in the opposite direction. The CLARITY Act helps establish clearer legal boundaries for decentralized and non-custodial activities."

Cathy Yoon, Chief Legal Officer of Harmonic, believes this legislation symbolizes a shift in Congress's attitude: "Moving from deliberation to a full Senate vote symbolizes an increasing recognition that not every cryptocurrency participant acts as a financial intermediary. Thoughtful legislation can set rules for custodians and centralized participants while preserving space for validators, open networks, and software developers."

Dramatic Last-Minute Turnaround

However, the deliberation process was not smooth. The entire morning was overshadowed by a partisan atmosphere, with both sides fiercely debating various amendments. The turning point occurred while the senators were still arguing, when Republican Chairman Tim Scott agreed to include several amendments he had previously rejected in order to gain the support of some Democratic senators for the bill. These additional amendments covered three main areas: strengthening investor protection, clarifying the scope of cryptocurrency-related activities that banks can engage in, and defining what constitutes a "truly decentralized" DeFi project.

The last item has been a long-standing issue championed by Democratic Senator Mark Warner, who advocates for stricter protective mechanisms for DeFi. Notably, these additional amendments received rare bipartisan support, contrasting sharply with earlier amendments that had split along party lines.

Democratic Senator Elizabeth Warren strongly protested the process, criticizing the amendments as merely "insufficient compromises," ultimately casting a dissenting vote and stating that the bill "is not ready," arguing that the Senate has higher-priority matters to address than cryptocurrency legislation.

After the bill passed, Scott told the committee members, "This has been one of the most enlightening and challenging processes since I became a U.S. Senator. The hours you all spent in dialogue and understanding each other are incredible." He expressed confidence that both parties would continue to work together to resolve remaining issues.

It is noteworthy that the defection of Senators Ruben Gallego and Angela Alsobrooks was key to the bill's passage today. Both were deeply involved in the bipartisan negotiation process for the bill.

However, they both made it clear that the committee vote does not equate to support from the full Senate. Alsobrooks emphasized, "My vote today is a vote to continue good-faith negotiations; we still have a lot of work to do." She stated that if existing concerns are not addressed, she would not continue her support when voting in the full Senate. Gallego also indicated that his final vote would depend on subsequent developments.

These statements foreshadow the real challenges the bill will face moving forward.

Two Major Hurdles: Ethical Provisions and the 60-Vote Threshold

Despite passing smoothly today, the bill faces significant obstacles before it can be sent to President Trump for signing.

The first hurdle is the conflict of interest provisions for government officials. Democrats have set this provision as a condition for supporting the full Senate vote, requiring restrictions on financial ties between senior government officials and cryptocurrency companies. However, this provision was not included in the current deliberation. Democratic Senator Kirsten Gillibrand has repeatedly stated that without this provision, the bill cannot secure the 60 votes needed for full Senate approval.

The White House has taken a firm stance on this issue. White House advisor Patrick Witt stated earlier this month at the Consensus Miami 2026 conference that any provision "specifically targeting the president" would not be accepted. Given Trump's deep involvement in the cryptocurrency industry, this topic is particularly sensitive, leaving little room for compromise between the two parties.

The second hurdle is the Senate's 60-vote threshold. Currently, Republicans hold only 53 seats in the Senate, meaning at least 7 Democratic senators need to support the bill. However, these votes are precisely tied to the ethical provisions that Republicans resist, creating a legislative stalemate.

In response to this deadlock, Cody Carbone, head of the cryptocurrency industry lobbying group Digital Chamber, analyzed for CoinDesk that a bipartisan agreement on the ethical provisions is likely to be reached before the bill is placed on the Senate's full agenda. He explained, "They will only bring the bill to the floor for a vote when they are confident they have the 60 votes." In simple terms, the Senate majority leader will not risk bringing a potentially failing bill to the agenda; this is a basic political game rule.

Therefore, the industry generally expects that the final version of the ethical provisions will be determined through behind-the-scenes negotiations, and by the time the bill actually reaches the Senate floor, all key disputes should have been resolved. Carbone further pointed out that the entire process must be completed before the August congressional recess; otherwise, the bill risks missing this year's legislative window. This timeline aligns with Democratic Senator Kirsten Gillibrand's recent assessment, as she also believes that if the bill cannot advance before the summer recess, the chances of it passing this year will significantly decrease.

Additionally, the bill must address concerns about financial crime. Beyond the ethical provisions, some Democratic senators still express doubts about whether the bill can effectively prevent cryptocurrency and DeFi technologies from being used for financial crimes. Law enforcement-related provisions are also one of the key issues that must be resolved in subsequent negotiations; otherwise, it will be difficult to garner enough Democratic support.

Traditional Finance's Last-Minute Counterattack Fails

Additionally, in the week leading up to the vote, the U.S. banking industry mobilized vigorously against the CLARITY Act. The American Bankers Association (ABA) sent over 8,000 letters to Senate offices warning that the "stablecoin yield" provisions in the bill could lead to a massive outflow of deposits from traditional banks to the cryptocurrency industry.

The final version of the bill adopted a compromise reached in early May between Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks: it prohibits stablecoin companies from paying passive interest similar to savings accounts (meaning users can earn interest just by holding their money), but allows "usage-based" rewards (for example, users can receive rewards when they engage in transactions, transfers, or staking activities).

When this plan was announced on May 4, Circle's stock price surged nearly 20% in a single day, reflecting the market's reaction to the outcome. The banking industry believes this compromise is too favorable to stablecoin companies. Traditional banks are concerned that even if passive interest is prohibited, the gray area of "usage-based rewards" will still be sufficient to attract a significant outflow of deposits, especially from younger generations and tech-savvy users.

Bank of America analyst Ebrahim H. Poonawala stated in a report in early May that while he believes the plan is overall "net positive for the banking industry" and can alleviate regulatory uncertainty, the ABA clearly disagrees with this optimistic assessment, which led to their large-scale mobilization before the vote.

From today's voting results and market reactions, it appears that the banking industry's last-minute lobbying efforts did not succeed. The bill passed smoothly with a vote of 15 to 9, and the stablecoin-related provisions remained intact, resulting in Circle's stock price turning positive on the voting day, reflecting the market's belief that the stablecoin industry has maintained a critical position in this legislative battle.

Missing August Means Waiting Until 2030

The cryptocurrency industry certainly expressed strong approval of this vote. Summer Mersinger, CEO of the Blockchain Association, called it a "decisive moment" and stated in a press release, "Digital asset policy must be built on a bipartisan foundation, and today's vote reflects the growing recognition that America needs clear rules of the game." She also pointed out that the bill will assist consumers in accessing compliant and innovative financial products, benefiting consumers and reducing U.S. users' reliance on offshore platforms.

However, the subsequent process for the bill is quite complex. First, the version passed by the Banking Committee must be merged with the version passed by the Senate Agriculture Committee along party lines earlier this year. The consolidated bill will then be sent to the full Senate for a vote, requiring 60 votes to pass.

After passing, the bill must also be voted on again by the House of Representatives. The House had previously passed a similar version with a significant margin of 294 to 134 in July 2025, so support from the House is relatively more assured. If the final versions from both chambers align and the legislation is completed, the SEC, CFTC, and Treasury Department will be authorized to begin drafting implementation rules.

It is estimated that the entire rule-making process will extend until 2027, with most compliance deadlines expected to fall between 2027 and 2028. In other words, even if the bill successfully passes Congress this summer, the cryptocurrency industry may still have to wait until 2027 or later to operate under the new regulatory framework.

Additionally, there is another time pressure: if this opportunity is missed in August, it may not come again until 2030.

Whether the bill can "successfully pass Congress" is itself uncertain, as there is little time left on the Senate's agenda, with the summer recess and midterm elections approaching, creating significant time pressure for the bill's advancement. Republican Senators Cynthia Lummis and Bernie Moreno have publicly warned that if the bill cannot advance before the August congressional recess, the next viable legislative window may not come until 2030, meaning that if this summer's opportunity is missed, the cryptocurrency industry may have to wait several more years for substantial legislative progress.

For U.S. cryptocurrency operators who have been trapped in "regulatory purgatory" for years, today's 15 to 9 vote may represent the most critical milestone on this long legislative road, but what lies ahead is still a hard battle against time.