US crypto clarity bill advances with 15-9 Senate vote despite ethics concerns

The U.S. Senate Banking Committee has advanced a landmark crypto regulation bill to the full Senate, aiming to create the first comprehensive framework for digital assets in the world's largest economy. The Clarity Act passed the committee by a 15-9 vote, a victory for the crypto industry that has spent over $119 million lobbying for clearer rules.

"This legislation does not take sides between traditional finance and new technology, or Republicans and Democrats," said Senator Tim Scott, the committee's chairman, who emphasized the bill provides much-needed legal certainty. The crypto industry has long sought to resolve a "regulatory identity crisis," as sFOX CEO Javier Martinez described it, with ambiguity over whether the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) has primary jurisdiction.

The bill proposes that the CFTC would assume primary oversight of much of the digital asset market, while the SEC would regulate tokens classified as securities. This distinction is at the heart of the industry's push for the legislation, which supporters say will allow exchanges to innovate and build products with confidence, ultimately attracting more institutional investment.

However, the bill's passage to the Senate floor sets up a fierce battle, as its bipartisan support is fragile. While all committee Republicans voted in favor, only two Democrats—Ruben Gallego and Angela Alsobrooks—crossed the aisle, and both indicated their support on the final floor vote is not guaranteed. The bill needs 60 votes to pass the full Senate, requiring at least seven Democrats to vote in favor.

Partisan Divide Over Ethics and AML

The largely party-line vote reflected a deep divide over the bill's content. Senator Elizabeth Warren, a prominent crypto critic, argued the bill was "a pro-industry crypto bill that will put American consumers, American investors and our national security and our financial system at risk."

Other Democrats echoed these concerns, stating the current version fails to adopt global anti-money laundering standards, exempts decentralized finance (DeFi) protocols from key financial standards, and does not close loopholes for crypto mixer services that can be used for illicit transactions. A significant sticking point is the lack of ethics provisions to prevent political officials and their families from profiting through cryptocurrency ventures, a concern raised by the Congressional Progressive Caucus.

Banks Win Stablecoin Battle

A key battle leading up to the vote was between the banking and crypto lobbies over stablecoins. Banks fought a provision that would have allowed stablecoins to offer yields, arguing this would create unfair competition for bank deposits. The final committee version sided with the banks, banning interest-like rewards for simply holding stablecoins. However, it still permits platforms like Coinbase to offer rewards based on user activity, such as lending or providing liquidity.

Despite the yield ban, the crypto industry viewed the overall bill as a major victory. "This is the biggest regulatory moment in crypto since spot ETFs," said Kyle Chasse, chief operating officer at Blockstreet. The market reacted positively to the news, with the global crypto market capitalization rising nearly 2% to $2.7 trillion. Bitcoin climbed over 2% to trade around $80,944, while Ethereum gained over 1%.

This article is for informational purposes only and does not constitute investment advice.