Key Takeaways:
The Senate's landmark crypto bill faces a contentious markup vote this week, with over 100 proposed amendments reopening disputes on everything from stablecoin rewards to ethics rules for lawmakers and their families. The legislation, a revised version of the CLARITY Act, aims to establish the first comprehensive regulatory framework for digital assets in the United States, primarily by granting the Commodity Futures Trading Commission (CFTC) more authority over the sector.
"This bill puts investors, our national security and our entire financial system at risk – and it will turbocharge Donald Trump’s crypto corruption," Massachusetts Senator Elizabeth Warren said in a statement. Warren, a prominent critic, argued the bill stunningly includes zero provisions to prevent conflicts of interest for federal officials.
According to a list obtained by POLITICO, the amendments highlight deep divisions. A proposal from Democratic Senators Jack Reed and Tina Smith seeks to tighten restrictions on stablecoin rewards by replacing the bill's "functionally equivalent" standard for interest with a stricter "substantially similar" test. Separately, an amendment from Senator Chris Van Hollen would prohibit the president, vice president, members of Congress, and other senior officials from owning or promoting crypto assets, a direct response to Democratic concerns.
The bill's passage now hinges on bipartisan compromise, as Republicans will need Democratic support to reach the 60-vote threshold required to overcome procedural obstacles in the full Senate. With influential Democrats like Kirsten Gillibrand stating they will not support the legislation without robust ethics safeguards, the fate of the first major U.S. crypto framework depends on negotiations over these key amendments ahead of Thursday's vote.
The fight over stablecoin rewards remains a central issue. The current draft prohibits crypto platforms from offering rewards "functionally equivalent" to bank deposit interest. Banking groups and their allies, including Senators Reed and Smith, argue this language is too loose and are pushing for the "substantially similar" test to prevent a potential flight of deposits from traditional banks to less-regulated stablecoin issuers. The outcome of this language fight is a key factor for exchanges like Coinbase, which had previously withdrawn support for a similar bill over reward restrictions.
Beyond stablecoins, ethics provisions are the most significant hurdle. Democrats have been unified in their demand for rules preventing federal officials from profiting from the industry they are tasked with regulating. "My hope is to get to a bipartisan markup on Thursday with a compromise on ethics," Senator Angela Alsobrooks, who helped broker a compromise on stablecoins, told Cointelegraph.
In a more positive sign for the industry, the bill includes language from the Blockchain Regulatory Certainty Act. An amendment from Democratic Senator Catherine Cortez Masto aims to solidify these protections by creating a safe harbor from criminal liability for software developers who do not control customer funds, shielding them from being classified as money transmitters. This provision has garnered widespread support from crypto advocacy groups.
This article is for informational purposes only and does not constitute investment advice.
