Crypto’s CLARITY Act faces partisan fight over ethics on Senate floor

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Crypto’s CLARITY Act faces partisan fight over ethics on Senate floor While Senator Tim Scott touted yesterday’s markup as bipartisan, just two Democratic senators supported the bill, and no Democratic amendments were adopted. The US Senate Banking Committee passed the crypto framework CLARITY Act yesterday. Now, the bill, for which the crypto industry has heavily lobbied since it was introduced in 2025, will head to the Senate floor for a broader debate. As Cointelegraph reported, over 100 amendments were proposed while lawmakers hashed out the exact language of the bill. These covered a wide range of issues, including ethics, AI sandboxes and stablecoin yields. But many of these fell apart. While two Democrats joined with their Republican colleagues, the vote was mainly along party lines. The chances for the bill to pass look good, with nearly all Republicans and some Democrats supporting, but increasing partisan gridlock ahead of the elections could still delay passage. CLARITY gets out of committee on party lines After yesterday’s session, Senator and committee chairman Tim Scott announced “a successful bipartisan markup” in advance of the bill proceeding to the Senate floor. Scott speaks at the markup session. Source: US Senate “After nearly a year of good-faith bipartisan negotiations, Senate Banking Committee Republicans and Democrats came together today,” he said. While the tone of Scott’s announcement leaned on supposed bipartisanship, the actual vote was mostly split along party lines. All 13 Republican members of the committee voted to advance the bill. All but two Democrats voted against, save for Senators Ruben Gallego and Angela Alsobrooks. Contrary to Scott’s message of bipartisanship, Senator Jack Reed stated that Republicans arbitrarily dismissed Democrats’ concerns about the bill, which ranged from how crypto could enable crime to the president’s use of crypto projects for personal enrichment. Indeed, the minority released a brief after the vote, outlining its concerns. They stated that the current version, as passed by the majority, fails to adopt global anti-money laundering standards, exempts DeFi protocols from financial standards and doesn’t close loopholes for crypto mixer services. Related: Who supports CLARITY on the US Senate Banking Committee? While there are clearly some pro-crypto Democrats in Congress, whether the bill can progress depends on them crossing the aisle to vote against their own party. Currently, the Republicans hold a 53-seat majority in the 100-seat Senate. To pass CLARITY, they’ll need 60 votes, so at least seven Democrats willing to vote with them. Republicans (red) hold a 53-seat majority in the Senate. At the Wyoming Blockchain Summit last year, Scott said that there were 12 Democrats open to the market structure bill, giving Republicans and the crypto lobby what they need to cross the line. But that may not ring as true now as it did then. The Congressional Progressive Caucus announced opposition to any bill which could “allow the President and his family to enrich themselves, engage in corruption, and sell access to the White House through cryptocurrency.” Notably, CLARITY’s current draft does not contain any such provisions. Progressive groups have called on lawmakers to address these concerns. A group of organizations including Americans for Financial Reform, Demand Progress Action, Indivisible and Public Citizen wrote a letter on May 8. “A bill without strong ethics provisions elevates the dangers of cheating consumers and investors, distorting and destabilizing financial markets, hindering competition, eroding longstanding investor protection laws, and making a mockery of regulatory enforcement,” they said. Ryan Cooper, a senior editor at progressive politics publication The American Prospect, even suggested that Democrats who voted with the crypto industry ought to be primaried. “Allowing yourself to be bought by the crypto lobby is unforgivable,” he wrote. Ethics could represent a politically volatile and important sticking point as the bill is debated on the Senate floor. Industry still optimistic Despite the largely partisan vote and the lingering ethics concerns, the crypto industry was largely optimsitc about the May 14 markup session. Javier Martinez, CEO and former chief legal officer at crypto trading platform sFOX, said the vote represented a “major step toward resolving crypto’s regulatory identity crisis in the United States.” Congress is “moving toward replacing regulatory ambiguity with a more defined legal framework. And markets respond to clarity,” he told Cointelegraph. Ji Hun Kim of the Crypto Council for Innovation said the vote will make the US more competitive in the digital asset space. CLARITY will “ensure that our country leads when it comes to digital assets policy and innovation,” he said. Blockchain investors and Blockstreet chief operating officer Kyle Chasse said, “This is the biggest regulatory moment in crypto since spot ETFs.” Notably, the bill was held up for months as the banking and crypto lobbies argued over whether stablecoins could bear yields. Banks claimed this could lead to a critical flight of deposits, endangering financial stability, while crypto accused banks of stifling competition. The version that passed markup last night sided with the banks, but would still allow crypto platforms to offer other activity-based rewards. Even then, pseudonymous crypto trader 10 Delta said, “The yield ‘ban’ is cosmetic & simply something for banks to tout as a victory.” “It bans stablecoins from paying you interest for just holding them: the way a savings account does. But it explicitly allows stablecoins to pay you rewards for using them: buying things, lending, providing liquidity, participating in any program.” Ultimately, the focus is still on the market. Alexander Lorenzo, founder and chief investment officer of CoinPicks Capital, said, “The last crypto bill to clear this exact process was the GENIUS Act in July 2025. Bitcoin hit an all-time high of $123,000 within weeks.” “CLARITY is bigger. It covers the entire crypto market, not just stablecoins.” Magazine: eToro founder timed Bitcoin top perfectly due to belief in 4 year cycles More on the subject

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