The Senate Banking Committee is scheduled to take up a stalled piece of cryptocurrency legislation next week that its backers say would establish a statutory regulatory framework for digital assets. The bill, known as the Clarity Act, is set for an executive session on May 14 at 10:30 a.m. (1430 GMT) in the Dirksen Senate Office Building in Washington, D.C., Chairman Tim Scott said on Friday.
Proponents argue the measure would resolve longstanding uncertainty over which financial regulators have authority over various parts of the crypto industry, a change advocates say could encourage wider adoption of digital assets. Among its core provisions, the bill would define when crypto tokens should be treated as securities, commodities or other categories, a legal clarity the industry has been pressing for.
One central and contentious element of the Clarity Act addresses rewards paid on dollar-backed stablecoins. Under a compromise negotiated by Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks, the text would prohibit customer rewards on idle holdings of such stablecoins because of their resemblance to bank deposits. At the same time, the compromise carves out an allowance for rewards tied to other stablecoin-related activities - for example, incentives paid for sending a payment.
That compromise has not quieted opponents. Banking trade groups have criticized the provision, arguing it would afford crypto companies too much latitude and could redirect deposits away from the regulated banking system. Those concerns have driven banks to mount a last-ditch push to peel away support from some Republicans on the Senate Banking Committee ahead of the hearing.
Lobbyists for the banking industry are seeking changes they say are necessary to close what they describe as a loophole that emerged from legislation enacted last year. That earlier law allowed intermediaries to pay interest on stablecoins, and banks contend that continuing to permit such payments by non-banks could produce a flight of deposits from insured banks and pose risks to financial stability.
Crypto firms counter that forbidding third parties - such as crypto exchanges - from paying interest on stablecoins would be anti-competitive. The industry has argued the Clarity Act is existential to the future of digital assets in the U.S. and necessary to remedy core, longstanding problems facing crypto companies.
Legislative timing and partisan dynamics add to the uncertainty. The House of Representatives approved its version of the Clarity Act in July of last year. For the bill to reach the president's desk, the Senate must pass it by the end of 2026. Many congressional Democrats have voiced opposition to the current Senate text, saying it is too weak on anti-money laundering measures and should do more to prevent political officials from profiting from crypto ventures.
Given those divisions, passage in the full Senate would require support from at least seven Democrats. Industry backers hope Congress can act in the coming months, before the November midterm elections in which Democrats could regain control of the House of Representatives. Whether that timetable is realistic will depend in part on how the committee session next week unfolds and whether negotiators can bridge the differences between the banking and crypto lobbies.
Contextual note - The procedural step announced by the committee chairman sets the stage for floor consideration but does not guarantee the bill's passage. The next several weeks are likely to see intensified lobbying from both banking groups seeking a tighter limit on stablecoin-related rewards and crypto companies pushing to preserve certain issuer and intermediary activities.