Senate Banking Committee advances CLARITY Act in bipartisan vote

The US Senate Banking Committee advanced the CLARITY Act on Thursday in a 15-9 bipartisan vote, marking a crucial step toward establishing a comprehensive regulatory framework for crypto.

The legislation now moves to the Senate floor for further deliberation before a final vote.

CLARITY Act advances amid ongoing Senate negotiations

All Republicans present on the Committee voted in favor of the measure, alongside Democrat Senators Ruben Gallego and Angela Alsobrooks, whose support followed last-minute negotiations over several proposed amendments.

"Last minute negotiations between Banking Committee Republicans and Democrats over multiple amendments were brokered this morning in an effort to secure bipartisan support for today's vote on the Clarity Act," wrote reporter Eleanor Terrett in an X post.

According to Terrett, one of the compromises involved changes to an amendment made by Senator Cynthia Lummis tied to Section 301 of the bill. The amendment reportedly removed language referencing the Blockchain Regulatory Certainty Act (BRCA).

The move drew criticism from some decentralized finance (DeFi) advocates, who argued that the revision could weaken legal protections for software developers as the legislation advances through Congress.

Terrett also noted that Senator Mark Warner did not vote to advance the bill despite speaking positively about portions of the revised text during the hearing.

Meanwhile, Senator Bernie Moreno said during the markup that lawmakers still need to address issues surrounding Section 301. This suggests that negotiations between Senate Banking Committee Republicans and the Senate Agriculture Committee could commence ahead of a full Senate vote.

The CLARITY Act seeks to define regulatory jurisdiction between the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). It also creates legal distinctions for digital assets categorized as securities or commodities.

The proposed framework also includes provisions covering stablecoins, DeFi protocols, market oversight and consumer protection.

The committee vote follows months of negotiations involving lawmakers, crypto industry participants and banking trade groups.

Earlier negotiations surrounding the legislation faced setbacks following the scrutiny of traditional banking groups. These groups argued that stablecoin rewards could introduce new risks to the financial system. 

The revised draft includes additional restrictions and supervisory requirements intended to address those concerns.

The crypto industry has broadly viewed the CLARITY Act as a key step toward achieving long-awaited regulatory certainty in the US. However, Committee approval does not guarantee final passage in the Senate, where broader bipartisan support will be required.