Clarity Faces a Crowded Senate Calendar
The Senate is back in session until the July 4 recess. Here's what the crypto market structure bill is up against.
Welcome to the Monday edition of the Crypto In America newsletter!
What you'll read: The latest on the Clarity Act, JPMorgan CEO Jamie Dimon signals banks aren't giving up the fight over stablecoin yield, and why Custodia Bank may be headed to SCOTUS in its fight for a Fed master account. Plus, what we're watching this week.
The Senate returns from its Memorial Day recess today and has roughly four weeks before breaking again for a two-week hiatus around America’s 250th Birthday.
Before then, lawmakers will need to tackle a reconciliation bill that includes funding for the Department of Homeland Security and potentially President Trump's White House ballroom, additional Pentagon funding requests, and a possible vote on reauthorizing Section 702 of FISA before the current extension expires on June 12.
And then, of course, there’s the Clarity Act, which proponents are hoping to put on the Senate floor before July 4th. Whether that’s realistic remains an open question given the upper chamber’s crowded agenda and the fact that the voting process could take anywhere from one to two weeks.
The market structure bill is also facing more than just a time crunch, as staffers work to reconcile the Senate Banking Committee's version with the Senate Agriculture Committee's text passed earlier this year, a process that could prove more time consuming than originally anticipated.
Here's why: The Senate Agriculture Committee's version passed on a 12-11 party-line vote with no Democratic support on January 29. Industry attention then became consumed by the fight over stablecoin yield, a months-long negotiation between crypto and banking interests that one participant described as "sucking all the oxygen out of the broader process."
Now, with that battle largely settled (at least for now), Crypto In America has learned that lawmakers and industry participants are turning back to unresolved differences in the Agriculture Committee's text, several of which remain under negotiation.
Convincing at least some Senate Agriculture Democrats to change their positions will be critical. The bill will need 60 votes to overcome a filibuster, making bipartisan cooperation essential to its path through the Senate.
Banking Committee Democrats Ruben Gallego (D-AZ) and Angela Alsobrooks (D-MD) voted to advance the bill out of committee, but have said their continued support hinges on reaching an agreement around ethics guardrails for government officials dealing in cryptocurrency, a process Gallego has described as being close to the finish line. Sen. Kirsten Gillibrand (D-NY), one of the bill's lead architects on the Dem side, has said ethics provisions are non-negotiable for Democratic support.
Other Democrats, including Sens. Mark Warner (D-VA), Catherine Cortez Masto (D-NV), and Raphael Warnock (D-GA), have sought additional assurances that law enforcement agencies will retain the tools needed to pursue bad actors operating in decentralized finance, though some industry participants worry this could mean further watering down of legal protections for software developers.
Deadline Realities
While proponents are eager to see crypto market structure legislation move back to the House, failing to get the Clarity Act through the Senate before July 4th would not necessarily be the end of the road for the bill.
Some observers have pointed to the August recess as the bill’s effective deadline, arguing that once lawmakers become consumed by campaign season, other priorities tend to fall by the wayside.
Others disagree.
“A lot has been made about deadlines, but in my opinion there is enough political capital invested in this that it would be hard to see it falling off the agenda for the remainder of the 119th Congress,” said Adam Minehardt, Chief Policy Officer at Hyperliquid Policy Center and a former Congressional staffer.
Still, Minehardt cautioned that the political calculus could change if the bill slips into next year and the midterm elections test whether crypto's political momentum can withstand a shift in congressional leadership.
Jamie Dimon Isn't Happy With the Clarity Act. Neither Is the Bank Lobby.
JPMorgan CEO Jamie Dimon didn’t hold back in his criticism of crypto market structure legislation, suggesting the nation’s largest bank won’t accept the current text as written.
Asked whether he was satisfied with the Clarity Act during an interview at the Ronald Reagan National Economic Forum on Friday, Dimon said no, citing concerns with the stablecoin yield compromise and what he described as insufficient consumer protections.
“It allows them to effectively pay interest on deposits, stablecoins or something like that… and doesn’t do anything for AML, BSA and there’s almost no legal protections, and the banks will not accept it that way,” he said.
Dimon’s comments come as Senate leadership eyes a floor vote on the Clarity Act in the coming weeks and as banking groups prepare a fresh lobbying campaign to change the stablecoin yield compromise brokered by Sens. Thom Tillis (R-NC) and Angela Alsobrooks (D-MD), which they argue does not go far enough to prohibit the payment of yield or interest on stablecoins.
Banking groups like the American Bankers Association have already generated more than 22,000 letters to senators and over 4,500 signatures on a separate petition opposing the current stablecoin framework, according to a source familiar with the effort. People involved in the campaign say the focus is now expanding beyond Congress, with banks making their case to small business owners, farmers and consumers whom they believe could lose access to credit if stablecoins ultimately begin drawing deposits away from the banking system.
The banking industry is not united on the issue. Several large institutions that are less reliant on consumer deposits have signaled greater openness to the compromise, viewing it as a pathway to expanded participation in the digital asset industry.
Meanwhile, the crypto industry appears largely satisfied with where the compromise landed. Coinbase, which fiercely opposed the original yield language released in January, has since moved on to other priorities. Chief Legal Officer Paul Grewal told Crypto In America that the banking industry ultimately won a major concession by securing a ban on rewards paid on idle stablecoin balances.
Coinbase's revamped Direct Deposit feature, which rolled out last week as part of a suite of products announced in December and allows customers to direct all or part of their paychecks into the platform and earn yield and rewards on those balances, has raised eyebrows in the banking industry. Critics say it demonstrates that the current stablecoin yield compromise still leaves room for crypto firms to compete for customer balances traditionally held by banks. Others view it as a niche product unlikely to attract many customers beyond existing crypto users, but a sign that crypto firms are increasingly positioning themselves as competitors to traditional banks.
Supporters of the program counter that if the Clarity Act becomes law, the offering would likely be modified as needed to comply with the bill’s stablecoin yield provisions.
Dimon, for his part, made little effort to hide his disdain for Coinbase and CEO Brian Armstrong, refusing to mention either by name. When the interviewer suggested Armstrong was speaking on behalf of the broader crypto industry, Dimon shot back that he was "full of shit."
Custodia Bank Appears Poised to Take Federal Reserve Fight to the Supreme Court
It appears Custodia Bank CEO Caitlin Long is preparing to take her fight with the Federal Reserve to the U.S. Supreme Court.
As first reported by Crypto In America on Friday, Justice Neil Gorsuch has granted Custodia additional time to file a petition for certiorari, asking the Supreme Court to review a divided 10th Circuit ruling that sided with the Federal Reserve in the bank’s years-long battle over access to a master account.
Long had no comment.
The petition is due July 11 and, if accepted by the high court, would mark Custodia’s final legal avenue after the 10th Circuit rejected the Wyoming crypto bank’s request for a full court rehearing earlier this year.
That denial came after a split 2-1 panel ruling in October that found the Federal Reserve’s regional reserve banks have legal discretion to deny master accounts. The panel sided with a Wyoming district judge, who concluded the Fed was not required to grant Custodia access despite its status as an eligible depository institution.
While the dispute centers on master account access, some legal observers believe the case could ultimately raise broader questions about the authority exercised by the Federal Reserve’s twelve regional Reserve Banks and the extent to which those decisions are subject to judicial review. Such questions could have implications that extend beyond Custodia, potentially touching on the role and accountability of regional Reserve Bank officials within the broader Federal Reserve System.
The Supreme Court agreeing to hear the case remains a long shot. The Court accepts only a small fraction of petitions filed each year, though Custodia enters the process with the backing of three appellate judges who favored rehearing the case.
👀 What To Watch This Week
Monday
The Senate is back in session.
HIVE Digital Technologies (HIVE) will report earnings after the bell.
Tuesday
The House is back in session.
The Proof of Talk Conference kicks off in Paris, France.
Eleanor will moderate a fireside chat with Franklin Templeton CEO Jenny Johnson and Blockstream CEO Adam Back. Jacquelyn will moderate a fireside chat with Canton Foundation Co-Chair Jorgen Ouaknine and Aave Labs founder Stani Kulechov.
Wednesday
8:15 a.m.: ADP publishes its May employment report.
10:00 a.m.: Treasury Secretary Scott Bessent testifies before the Senate Finance Committee on the administration's Fiscal Year 2027 budget.
2:00 p.m.: The Federal Reserve publishes its Beige Book, giving a snapshot of economic conditions across the country.
Thursday
8:30 a.m.: The Bureau of Labor Statistics announces Q1 productivity figures.
10:00 a.m.: The House Financial Services Committee hears testimony from the prudential financial regulators.
The SEC's Investor Advisory Committee meets to discuss private markets, proxy voting and fund reporting.
Friday
8:30 a.m.: The BLS releases the May jobs report and unemployment rate.
3:00 p.m.: The Federal Reserve publishes consumer credit numbers.
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