The long-awaited CLARITY Act is approaching a major turning point in Washington, with the Senate Banking Committee scheduled to hold its long-delayed markup on Thursday, May 14.
The bill’s journey has already seen significant setbacks. After major disputes arose earlier in the year – when the committee first postponed action – the markup was pushed back following prolonged battles over key sections of the legislation.
Meanwhile, the House passed its version of the CLARITY Act in July of last year, and the Agriculture Committee approved its own version of the measure earlier this year.
With these steps taken, the Senate Banking Committee’s next move is widely seen as a decisive step in moving the legislation closer to a floor vote.
CLARITY Act Status Update
As before reported According to Reuters, supporters argue that the bill is necessary to address ongoing and unresolved issues facing crypto companies and to provide clearer rules.
One of the main goals of the legislation is to establish more consistent guidelines on when crypto tokens should be treated as securities or commodities – an issue that the industry has said has created legal uncertainty for years.
Beyond classification, the CLARITY Act also contains a compromise provision aimed at easing a heated dispute between crypto companies and the traditional banking industry.
Under a deal brokered by Senator Thom Tillis and Senator Angela Alsobrooks, the bill would ban customer rewards on unused stablecoin holdings.
The rationale is that stablecoins are often seen as resembling bank deposits, and lawmakers want to prevent stablecoin issuers from offering incentives in a way that functions like interest on traditional accounts. At the same time, rewards for other stablecoin-related activities, such as sending payments, would remain permitted.
Crypto vs. Banks
Banking trade groups have opposed the stablecoin rewards provision, arguing that it gives too much flexibility to crypto companies and could take deposits away from the regulated banking system.
In response, the banks have launched what they describe as a last-ditch effort to win over skeptical Republicans on the Senate Banking Committee ahead of the hearing.
On Sunday, the CEO of the American Bankers Association sent a letter to member bank CEOs urging them to contact their senators and push for change, warning that — without changes — the provision could create economic risks.
The banking industry’s campaign is also linked to concerns about a “loophole” they say stems from the country’s first crypto bill, the stablecoin-focused GENIUS Act, signed into law last year.
This legislation allowed certain intermediaries to pay interest on stablecoins, and banks say this could result in deposits moving out of the insured banking system, potentially creating instability.
From a banking perspective, the CLARITY Act aims to address these issues. From the crypto industry’s perspective, preventing third parties, such as exchanges, from paying interest on stablecoins would be anti-competitive.
However, Crypto in America reported As of Monday, even if the dispute over the yield-linked stablecoin does not prevent the bill from advancing to the committee stage, the question of ethics, among other key provisions, could complicate the politics surrounding the legislation.
The report said analysts expect the CLARITY Act to advance along partisan lines, with no Democrats on the Senate Banking Committee expected to vote in favor.
For now, all eyes are on May 14, when the Senate Banking Committee’s markup could bring the CLARITY Act closer to final legislative momentum.
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