Crypto Industry Sees Progress in Clarity Act Ahead of Pivotal Senate Banking Vote
Advocates signal approval for the latest version of market structure legislation as banking groups and Democrats push for major changes
Welcome to the Wednesday edition of the Crypto In America newsletter!
What you’ll read: Inside the final push ahead of Thursday’s Clarity Act markup, from banking industry lobbying to ongoing ethics negotiations, plus our wide-ranging interview with CZ, co-founder and former CEO of Binance, and some of the week’s top stories.
Ahead of Thursday’s landmark vote in the Senate Banking Committee, the crypto industry is expressing cautious optimism that months of negotiations may have finally produced a workable version of market structure legislation.
Following the release of the latest 309-page draft of the Clarity Act in the early hours of Tuesday morning, industry players and policy leaders have taken to social media to voice approval that the bill is, at the very least, in a better place than it was in January, when key advocates like Coinbase withdrew support.
At a high level, the latest draft attempts to strike a middle ground between crypto and traditional finance by tightening rules around stablecoin yield and token offerings while preserving key protections for decentralized finance that were absent from earlier versions and sparked industry backlash in January. The bill also folds in a housing section aimed at creating a federal incentive program to encourage local housing growth, co-sponsored by Senator John Kennedy (R-LA), who previously wavered on whether he would back the sweeping crypto legislation but has since said he plans to vote in favor of advancing it on Thursday.
This morning, Coinbase CEO Brian Armstrong filmed a video message from inside the Capitol ahead of a Senate GOP lunch he is expected to attend this afternoon, calling the Clarity Act a “strong” bill that would “benefit the American people.” Managing Partner of a16z crypto Chris Dixon said the legislation had “significantly improved since January.”
AARP, one of the country’s largest advocacy groups for older Americans and retirees, has come out in support of the market structure bill, saying provisions aimed at regulating crypto kiosks and preserving state enforcement authority would help protect older Americans from fraud.
Some of the nation’s biggest banks have also privately expressed support for the bill, even as other corners of the banking industry wage an aggressive campaign against the controversial stablecoin yield compromise included in the text.
“We are supportive of the bill and really hope to see it pass out of committee on Thursday,” one executive at a major investment bank told Crypto In America. “It’s good for us, but also for the broader industry, to have more certainty and the ability to operate in an asset class the banking industry currently has limited ability to participate in.”
But, as Crypto In America has reported, the banking industry is far from unified. Large banks with retail arms, along with community banks concerned about the impact a burgeoning stablecoin market could have on their own businesses, are currently engaged in an intense lobbying push that includes an online advocacy portal, phone calls, and letters to Senate offices.
Members of the American Bankers Association, which claims to represent banks of all sizes, have sent more than 8,000 letters to Senate offices since last Friday urging lawmakers to tighten restrictions around yield-bearing stablecoins.
And their concerns are not falling on deaf ears. Included among the more than 100 amendments to the bill text filed by Banking Committee members on Tuesday evening is a proposal from Senators Jack Reed (D-RI) and Tina Smith (D-MN) that would further tighten restrictions on crypto companies offering stablecoin rewards.
Other proposed amendments are also causing heartburn across the industry, including several that DeFi Education Fund says would harm DeFi technology, users, and developers by stripping away key protections for users of decentralized technology.
Senator Elizabeth Warren (D-MA), who criticized the Clarity Act as both a national security threat and a risk to the financial system, proposed more than 40 amendments, including one that would prohibit the Federal Reserve from extending services typically reserved for banks to crypto companies.
It remains unclear which amendments will ultimately receive votes during the markup and, given Republicans’ majority on the committee, many of the more controversial proposals from Democratic members are unlikely to advance even if they are considered.
In the meantime, ethics remains the key sticking point for committee Democrats and could ultimately determine whether tomorrow’s markup receives any Democratic support. Certain members of the Senate Banking Committee met privately this morning in an effort to hammer out a last-minute ethics deal addressing lawmakers’ concerns about the Trump family’s crypto dealings.
Discussions between the lead Democratic negotiators on the issue, Senators Ruben Gallego (D-AZ) and Adam Schiff (D-CA), and Republican committee members including Thom Tillis (R-NC) and Cynthia Lummis (R-WY), are expected to continue into the afternoon.
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CZ Unfiltered: Prison, Politics & Crypto’s Next Era
In this week’s episode, we sat down with Changpeng Zhao, better known as CZ, the co-founder and former CEO of Binance, for a wide-ranging conversation on regulation, leadership, and the future of crypto.
We discuss launching Binance in 2017, navigating U.S. versus global markets, prior interactions with former SEC Chair Gary Gensler, and reflections on serving four months in prison, including the leadership decisions he says he would approach differently in hindsight.
CZ also addresses Iran-related allegations, his relationship with the Trump family, rebuilding efforts at Binance.US, the AI economy, and what he believes will define the next phase of the crypto industry.
Watch this episode on all platforms here.
Midweek Recap
ICYMI: Here are some of the biggest stories making headlines this week.
The Senate officially confirmed Kevin Warsh as a Federal Reserve governor and is expected to confirm him as chairman as soon as today.
Coinbase launched Solana-backed loans, letting U.S. users borrow up to $100K in USDC against their Solana holdings without selling their SOL.
Ripple’s prime brokerage unit secured $200 million from Neuberger Berman to expand margin trading across traditional and digital asset markets.
BlackRock filed with the SEC to launch its second tokenized fund using infrastructure from tokenization platform Securitize.
JPMorgan is launching a tokenized money market fund on Ethereum designed to meet stablecoin reserve requirements under the GENIUS Act.
Bermuda inked a partnership with Stellar to begin moving payment and financial services onchain as it aims to become the world’s first fully onchain economy.
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