Tuesday Senate procedural vote tests bill as banks, Democrats push back
Senate Republicans have unveiled new ethics language for the Clarity Act — officially the Digital Asset Market Clarity Act — that would bar federally elected officials and their spouses from issuing their own cryptocurrencies. NPR reported the provision could effectively prevent President Trump from continuing $TRUMP, the meme coin he launched early last year — a point Trump agreed to abide by.
Under the revisions, officials would also have to divest “significant” financial stakes in the crypto sector, a provision that could affect some of Trump’s crypto business interests. Critics told NPR the divestiture language is loose enough to allow the president to avoid the requirement altogether. The new language would also give state attorneys general expanded authority to bring lawsuits if they suspect a breach of ethics rules.
Democrats, including Massachusetts Sen. Elizabeth Warren, have argued the clause does not do enough to prevent conflicts of interest. Enforcement would fall to the Department of Justice, which is currently led by Todd Blanche, a former attorney for Trump — a structure Democrats have said provides an insufficient check on a sitting president. Those concerns intensified after Trump disclosed that he and his family earned $1.4 billion last year from his crypto ventures, an unprecedented sum for a sitting president, NPR reported.
The procedural vote scheduled for Tuesday is the Clarity Act’s most significant test in the Senate. To advance, the bill needs 60 votes — a threshold that would require all 53 Republicans to back it along with at least seven Democrats or Independents. Senate Majority Leader Thune set up Tuesday’s vote before the chamber broke for recess even though the outcome remained uncertain, NPR reported. The vote is a priority for Trump, who has strongly supported the crypto industry.
If the bill becomes law, NPR reported it “would mark a sea change from today,” where crypto regulation can change depending on who controls the White House. Under President Biden, the Securities and Exchange Commission took an aggressive enforcement approach against the crypto sector. That posture changed under Trump, with the agency now led by Paul Atkins, a former adviser to the industry.
The Clarity Act would formally split oversight of the crypto sector between the SEC and the Commodity Futures Trading Commission. Under the bill, the CFTC — a far smaller regulator — would receive the majority of control. Critics say handing the CFTC the bulk of the reins is the crypto sector’s way to avoid heavy regulatory scrutiny, NPR reported. Crypto industry executives deny that is the case, and Trump administration regulators have defended their oversight of the industry.
Ryan VanGrack, vice chair of Coinbase, told NPR that “Tens of millions of Americans are investing in products that don’t have clear regulatory oversight.” “That’s an abomination,” he said. “Whether you love crypto or you hate crypto, you should want it regulated. And this is the best opportunity we have ever had to do just that.” The crypto sector has grown beyond Bitcoin to include a wide range of cryptocurrencies — including meme coins — while the technology underpinning Bitcoin and some other cryptocurrencies is starting to be adopted by the broader financial sector, according to NPR.
Outside Congress, the banking sector has mobilized against the bill. One of the main disputes involves stablecoins, a segment of the crypto market. The legislation would allow crypto companies offering stablecoins to provide financial rewards such as interest payments to customers who place their money with them. Banks argue those incentives allow crypto companies to compete for customers’ deposits without being subject to the same regulations as traditional banks. Crypto companies have disputed that characterization and argue the incentives are similar to what many credit card companies offer, such as cash back or points.
Community bankers have been especially vocal. Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, told NPR that keeping customers’ money with local banks is critical because it allows community banks to provide small-business and agricultural loans to members of their communities. “If community banks aren’t there, and those local deposits aren’t there to fund it, who’s going to fund those small businesses and ranchers and farmers?” she said. “I don’t think it’s going to be the crypto industry.”
The crypto sector had hoped to pass the Clarity Act much sooner and has amassed tens of millions of dollars to spend on the upcoming elections, NPR reported, but the spending has not erased the disagreements that have dogged the bill for months. Opponents see the legislation as the industry’s attempt to encode into law rules that are far too lenient on the industry, without enough safeguards, NPR reported.
Even if the bill clears Tuesday’s procedural hurdle and the Senate passes it, the measure would not go straight to President Trump. Because senators have changed the bill since the House passed its version last year, both chambers would still have to agree on a final version. NPR reported it is unclear how soon that might happen, given a packed congressional agenda and midterm elections in early November. The Clarity Act has faced so many twists and turns that, even if it survives beyond Tuesday, the path ahead remains uncertain.