Senate Banking Panel Advances Clarity Act 15-9

The Senate Banking Committee voted 15-9 on Thursday to advance the Clarity Act, sending the bill to the full Senate. The measure would create a federal framework for digital assets and allocate oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Democratic Sens. Ruben Gallego and Angela Alsobrooks joined the majority in the committee vote.

The bill follows a House-passed version last year and comes after months of negotiations involving the White House, lawmakers, crypto companies and banking trade groups. The Senate Agriculture Committee advanced a different crypto bill in January without Democratic support. A planned Banking Committee markup in January was delayed after a major crypto exchange withdrew backing over language on stablecoin rewards; the committee resumed consideration after further talks on technical and policy issues.

Committee staff recorded more than 100 amendments filed against the draft, addressing stablecoin incentives, ethics rules and decentralized finance. Senate Banking Chair Tim Scott said several amendments were filed incorrectly and were not considered on the floor. Senator Jack Reed criticized the handling of the process, calling the proceedings “not an example of working together.”

A central dispute focused on the Blockchain Regulatory Certainty Act provision, which would state that non-custodial developers are not money transmitters. Industry groups support the provision as protection for decentralized software developers. Law enforcement officials and some senators argued the language could hinder criminal investigations. Negotiators added text specifying that a non-custodial developer who has the “specific intent” to transfer funds, and knows those funds will be used for criminal purposes, may still face criminal charges.

A participant in the negotiations said the revised language likely would not have blocked the Justice Department from pursuing charges in the Tornado Cash-related case against developer Roman Storm. In that case, jurors convicted Storm on a money transmitting charge last year but deadlocked on a money laundering count and a sanctions-related charge.

Ethics provisions shaped debate on the committee. Some Democrats raised concerns about cryptocurrency projects tied to the president and his family and pressed for restrictions on officials and family members trading or promoting digital assets. Senator Chris Van Hollen offered an amendment to bar the president, vice president, other federal officials and their families from owning or promoting digital assets; the amendment failed 13-11. Senator Ruben Gallego, a yes vote in committee, warned he could oppose the bill on the Senate floor if requested ethics language is not included.

Senator Mark Warner withdrew an amendment to create a “Responsible Innovation in Decentralized Finance” section, saying unresolved issues remain. He described recent weeks as difficult for crafting DeFi policy, adding he intends to keep working on the measure.

Industry groups are monitoring the bill and plan to score votes. The executive director of one crypto advocacy group characterized a full Senate vote as the most important crypto-related vote lawmakers have faced. A research team at TD Cowen noted committee approval does not guarantee passage on the Senate floor and said senators could change their positions if the bill is altered before a final vote.

The Clarity Act now moves to the full Senate, where senators can offer more amendments and further debate is expected. Sponsors and stakeholders face a compressed timetable with midterm elections in November and remaining disagreements over enforcement, stablecoin policy and ethics provisions.