By Hannah Lang
May 14 (Reuters) – The Republican-led Senate Banking Committee on Thursday advanced long-awaited legislation that would create regulations for cryptocurrencies – a landmark step for the bill which has been bogged down by a dispute between crypto companies and banks.
The bill, which was advanced with support from two Democrats, will now proceed to the full Senate, setting the stage for a fierce lobbying fight.
The Clarity Act would clarify regulators’ jurisdiction over the sector. All Republicans on the committee voted in favor of advancing the bill, and were joined by Democrats including Arizona Sen. Ruben Gallego and Maryland Sen. Angela Alsobrooks, in a huge win for the crypto sector and a potential lifeline for the bill’s chances of passage this year.
Still, Gallego and Alsobrooks said they might not vote in favor of the bill on the Senate floor as negotiations between lawmakers remained fluid.
Several Democrats expressed concerns about the bill, arguing its anti-money laundering provisions are too weak and that it should bar political officials from profiting from crypto ventures.
A bipartisan group of senators came to an initial agreement mid-way through Thursday’s hearing, where tensions flared over whether the compromise should be considered at all, given it came after amendments on the bill were due.
Republican Sen. Tim Scott, the chairman of the banking committee, ultimately allowed the compromise to be considered but rejected other outstanding amendments – including one on stablecoin yield – from Democrats.
‘IT’S TAKEN YEARS’
The crypto industry has pushed aggressively for the legislation, saying it is critical for the future of U.S. digital assets and necessary to fix core problems for crypto companies. Among other things, the bill would define when crypto tokens are securities, commodities or otherwise, giving the industry what it says is much-needed legal clarity that should help boost digital asset adoption.
“This legislation does not take sides between traditional finance and new technology, or Republicans and Democrats,” said Scott at the outset of the hearing.
The industry spent more than $119 million backing pro-crypto candidates in 2024 hoping to advance the Clarity Act and a separate bill paving the way for wider adoption of dollar-backed tokens known as stablecoins, which became law last year.
“It’s taken years of work to get to this point,” said Miller Whitehouse-Levine, CEO of the Solana Policy Institute, which advocates for policies to advance digital asset technology.
Banks are fighting a key provision in the bill, arguing that it will create competition for deposits by giving crypto companies too much leeway to offer rewards on stablecoins. Bank trade groups launched a last-ditch effort to peel off committee Republicans, with the American Bankers Association on Sunday publicly calling for its member CEOs to push committee senators to tighten the stablecoin language.
Trump, who courted crypto cash on the campaign trail and whose family has profited from its own token, has prioritized crypto reform during his second administration and the White House has been pushing hard for the bill, Reuters reported.
The House passed its version of the Clarity Act last year. If the Senate fails to pass the bill this year, when November midterm elections could see Democrats take the House, it is unlikely to become law in the foreseeable future, say analysts.
Sen. Elizabeth Warren, the top Democrat on the banking committee, expressed concern at the mark-up that the bill was too friendly to crypto companies.
“Our job is to serve the American people. Our job is not to advance a pro-industry crypto bill that will put American consumers, American investors and our national security and our financial system at risk,” she said.
(Reporting by Hannah Lang in New York; editing by Michelle Price and Nick Zieminski)
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