Senate Advances CLARITY Act, Industry Hails Committee Vote

On Thursday in Washington, the Senate Banking Committee voted 15-9 to advance the CLARITY Act, a bipartisan bill aimed at creating a market structure for digital assets. The committee’s action sends its version of the legislation closer to the full Senate but leaves several issues unresolved, including enforcement, financial-crimes rules and ethics provisions affecting federal officials and their families.

Senators Ruben Gallego and Angela Alsobrooks joined the majority but attached conditions. Gallego indicated he will oppose final passage if the ethics language is not strengthened to restrict certain transactions by the president, vice president, other federal officials and immediate relatives. Alsobrooks described her committee vote as a way to “keep working in good faith,” while noting it does not guarantee she will support the bill on the Senate floor.

Committee negotiators debated multiple amendments and negotiated late into the day on how to treat decentralized finance, stablecoin reward programs and protections for noncustodial software developers. The Banking Committee’s draft differs from an earlier Agriculture Committee version; both texts must be reconciled before a final Senate vote.

Industry groups and crypto firms welcomed the committee vote. Cody Carbone, president of the Digital Chamber, reported positive talks with Gallego and the White House Crypto Council prior to the markup. Ji Kim, CEO of the Crypto Council for Innovation, described the outcome as a turning point for bipartisan progress. Summer Mersinger, chief executive of the Blockchain Association, called the vote an important bipartisan step. Brian Armstrong, CEO of Coinbase, posted that the committee’s changes addressed concerns raised in January on rewards, tokenization, DeFi and Commodity Futures Trading Commission authority.

Negotiators made a late concession that, according to a person familiar with discussions, removed protections for noncustodial developers from Section 301. That change narrowed language that would have limited treatment of some software developers as money transmitters. The Blockchain Regulatory Certainty Act, which aims to clarify that noncustodial developers are not money transmitters, remains a point of dispute.

DeFi advocacy groups said parts of the package are a move toward legal software protections but expressed concern about Section 301, which would apply Bank Secrecy Act–style rules to certain DeFi activity. The DeFi Education Fund called the bill an important step for embedding software protections into law while flagging potential problems with Section 301.

Stablecoin reward programs were a major point of contention. Banking groups, including the American Bankers Association and the Bank Policy Institute, urged senators to add stronger limits on rewards for holding stablecoins, warning such programs could draw deposits away from banks and affect local lending. Those groups said the committee bill is a step toward a regulatory framework but needs tighter guardrails on rewards to protect deposit stability.

The committee-approved text now enters negotiations with the Agriculture Committee’s version. Sponsors and supporters said the bipartisan result and concessions won in markup give the legislation momentum, but unresolved legal, enforcement and ethics issues will determine whether the measure can secure enough votes on the Senate floor. Congressional staff expect the reconciliation process to take weeks before any final Senate action.