CLARITY Act Heads to Markup Buried Under 100-Plus Amendments

According to a list obtained by POLITICO, committee Democrats have filed dozens of changes targeting stablecoin yield restrictions, software developer protections, conflicts-of-interest involving the president, and the Federal Reserve’s relationship with digital asset firms. Republicans, who hold the gavel and the majority, are largely proposing only minor edits.

Anti-crypto Senator Elizabeth Warren of Massachusetts is leading the Democratic assault. The committee’s ranking member has filed more than 40 amendments alone, several of which would excise entire sections of the bill governing the oversight of digital commodities. Warren’s filings include a provision barring the Federal Reserve from granting master accounts to crypto firms, an ethics package targeting Trump-family business interests, and — venturing well beyond crypto — a proposed cap on credit card interest rates and a request for bank supervisory records related to “Jeffrey Epstein and his co-conspirators.”

“This bill puts investors, our national security and our entire financial system at risk — and it will turbocharge Donald Trump’s crypto corruption,” Warren said in a statement released alongside the unveiling of the 309-page text on Monday, pointing to a Bloomberg estimate that the president and his family have realized at least $1.4 billion in gains from crypto-related ventures since the inauguration.

The full draft can be read here

Stablecoin yield, again

The bill’s most contested provision — restrictions on stablecoin yield — has become the focal point of a major lobbying push from the traditional banking sector. American Bankers Association members have reportedly sent more than 8,000 letters to Senate offices since last Friday, urging lawmakers to tighten language that banks fear will let stablecoin issuers and exchanges replicate the economics of interest-bearing deposits.

The current text bans third-party platforms from offering yield “functionally equivalent” to bank deposit interest — a compromise brokered by Republican Senator Thom Tillis and Democrat Angela Alsobrooks after months of deadlocked negotiations. Senators Jack Reed of Rhode Island and Tina Smith of Minnesota want to swap that for a “substantially similar” test, language the banks prefer because it captures a wider range of products. Reed, who has filed 18 amendments in total, would also entirely scrap the Blockchain Regulatory Certainty Act provisions that shield non-custodial software developers from being regulated as money transmitters. A separate Reed amendment would ban crypto from being used as legal tender, including for the payment of taxes.

The yield fight has been the bill’s longest-running political negotiation, with banking and crypto lobbyists deadlocked for the better part of a year. As BNC has previously reported, the underlying question is whether dollar-pegged tokens are best understood as payment instruments or as deposit substitutes — a definitional fight with significant implications for how net interest margin gets distributed between banks and the on-chain economy.

Ethics, developers, and DeFi

Ethics is the one area where Democratic amendments have a realistic chance of survival, because crypto’s advocates need a clutch of Democratic votes to clear the Senate’s 60-vote cloture hurdle. Senator Chris Van Hollen has filed an amendment, backed by some Republicans, that would bar the president, vice president, members of Congress, senior officials and their families from owning, promoting or being affiliated with crypto. Democratic Senator Kirsten Gillibrand has said publicly the bill will not pass the chamber without it.

That language was stripped out of the parallel bill that cleared the Senate Agriculture Committee in January. Negotiators reportedly met in a closed-door session on Tuesday to try to land an ethics deal before Thursday’s markup, but participants described the talks as contentious.

On the developer side, Democratic Senator Catherine Cortez Masto has proposed a safe harbor from criminal liability for non-custodial software developers who fail to register as money transmitters — a provision the DeFi Education Fund and other industry groups have championed as essential to [keeping protocol-building activity onshore][INTERNAL-2]. Senator Mark Warner, who has been at the center of illicit-finance discussions, is proposing a “control test” to determine when operators of non-decentralized trading protocols become subject to Bank Secrecy Act anti-money laundering obligations. And Democratic Senator Andy Kim wants to reestablish the Justice Department’s National Cryptocurrency Enforcement Team, dismantled by the department in April last year.

Republican amendments are sparser. Tennessee’s Bill Hagerty is seeking a ban on central bank digital currencies issued by the United States.

Theater, mostly

Most of the filings will not survive the markup. The committee will vote on each amendment individually, with simple majority required for adoption, and the Republican majority is broadly aligned on the manager’s amendment as currently drafted. One crypto industry source quoted by The Block characterized many of the Democratic filings as reflecting “a fundamental misunderstanding of the technology and a desire to expand existing regulations to this novel technology.”

The political theater is, however, part of the process. A January markup was indefinitely postponed after Coinbase withdrew support over fears that the bill would be amended into something it could not back. Four months of renegotiation produced the 309-page text released Monday — up from January’s 278 pages — and crypto lobbyists are now broadly comfortable with the framework even if individual provisions remain contested.

The White House has set a July 4 target for full passage. Gillibrand has predicted early August. Whichever proves accurate, Thursday’s markup is the critical procedural gate. If the committee advances the bill, it will be merged with the version that has already cleared Senate Agriculture and head to the floor, where the 60-vote threshold — and the ethics fight that comes with it — still awaits.

Prediction markets had the bill’s passage odds at 79% as of Monday, before the amendment list became public.