CLARITY Act on Track to Pave the Way for New Rules for Crypto Assets and Stablecoins

The US Senate Banking Committee has advanced the Digital Asset Market Clarity Act — the CLARITY Act for short — to the full Senate floor by a vote of 15 to 9. The legislation is intended to finally resolve years of jurisdictional conflicts between US regulatory authorities and establish clear rules for which crypto assets are to be treated as securities and which as commodities. The bipartisan vote is considered a milestone — but the path to becoming law is not yet complete.

Two Democrats Make the Difference

The cross-party support is noteworthy: Senators Ruben Gallego and Angela Alsobrooks voted in favor of the bill alongside all Republicans. Several additional Democrats signaled during the roughly two-and-a-half-hour, at times heated hearing that they could support the legislation on the Senate floor under certain conditions. Senator Mark Warner also indicated his willingness to vote in favor given the right additions.

On the Senate floor, 60 votes are now required to prevent a filibuster. With 43 Republican senators, at least seven additional Democrats are needed. Cody Carbone, head of the industry association Digital Chamber, expects intensive negotiations over the coming three weeks — particularly with the Senate Agriculture Committee, which also has jurisdiction and whose draft still needs to be reconciled with that of the Banking Committee.

SEC or CFTC? A Question of Maturity

The core of the legislation is the division of regulatory responsibilities. Currently, the United States has a patchwork of individual enforcement actions by the securities regulator SEC and the commodities regulator CFTC. The CLARITY Act sorts digital assets into clearly defined categories: digital commodities such as Bitcoin and Ether will fall under CFTC oversight, while investment contract assets remain with the SEC. Payment stablecoins receive their own regulatory framework.

Classification is determined by a four-step decentralization test: once a network reaches sufficient maturity and is no longer controlled by a central party, oversight shifts from the SEC to the CFTC. Exchanges, brokers, and custodians must additionally meet new requirements regarding the segregation of customer funds and disclosure obligations.

Stablecoin Interest Payments: A Point of Contention

One of the most contentious disputes centered on whether interest may be paid on stablecoin holdings. The so-called Tillis-Alsobrooks compromise prohibits interest payments that function similarly to traditional bank savings products. Major banking associations consider this insufficient — they fear deposit outflows from the traditional banking system if crypto platforms were able to offer attractive yields on dollar-backed stablecoins. An amendment that was not debated would have aligned the treatment of yield earnings even more closely with the demands of the banking lobby.

Safe Harbor for Developers, Sandbox for Startups

For the crypto industry, the draft contains several practically relevant reliefs. Software developers who write open-source code without having control over user funds receive a safe harbor provision. Young companies can raise up to $50 million per year over four years under “Regulation Crypto” without having to fulfill full registration requirements. The SEC and CFTC are also to establish a joint innovation lab in which companies can test new products under supervision for up to two years.

Ethics Remains the Most Sensitive Issue

Despite the bipartisan approval in committee, the biggest unresolved issue is not technical but political in nature. Several Democrats are calling for clear ethics rules that would prohibit senior government officials from conducting business with the crypto industry. A corresponding amendment that would have banned the President, Vice President, and members of Congress from certain crypto activities was defeated by a vote of 11 to 13. Senators signaled during the hearing that they are close to an agreement — but details are not available, and the White House would need to consent. Another amendment, which Senator Elizabeth Warren described as supported by law enforcement agencies, never even came up for debate.

What Comes Next

Should the Senate clear the 60-vote threshold, the legislation moves to the House of Representatives. An earlier version had already secured a majority there in the previous year, which increases the chances of passage. However, members of the House regularly attempt to attach a ban on central bank digital currencies (CBDCs) to unrelated legislation — a maneuver that would also be conceivable with the CLARITY Act and could delay the process.

Looming over everything is the political backdrop: the crypto industry poured hundreds of millions of dollars into Super PACs such as Fairshake during the 2024 election campaign and is planning similar efforts for 2026. Organizations such as Stand With Crypto, which is close to Coinbase, announced they would publicly evaluate senators’ voting records — a form of pressure that was visibly present throughout the hearing. Whether the CLARITY Act will actually become law in this form will be decided in the coming weeks during negotiations between the Banking and Agriculture Committees and on the Senate floor.