On Thursday, May 14, at 10:30 a.m., the Senate Banking, Housing, and Urban Affairs Committee will meet in executive session to mark up H.R. 3633, the Digital Asset Market Clarity Act of 2025 (the CLARITY Act). The session is a key procedural step for this comprehensive digital asset market structure legislation that, if enacted, would create a new federal framework for how crypto markets are regulated, supervised, and policed for fraud, illicit finance, and other purposes.
The markup follows the release of a 309‑page draft that reflects more than ten months of bipartisan negotiations and extensive engagement with regulators, law enforcement, academics, and industry. In the last 48 hours, Committee members have reportedly filed over 100 amendments, signaling that tomorrow’s session is likely to be active and potentially contentious. Although the Committee has not published the full list, the amendments cover a variety of issues including stablecoin yield language, Federal Reserve master account access, the Blockchain Regulatory Certainty Act safe harbor for non-custodial developers, a possible Federal Reserve CBDC ban, and ethics provisions targeting senior government officials’ digital asset activity.
Background
In its Myth vs. Fact materials, the Committee leadership is positioning the CLARITY Act as a comprehensive market structure bill that “establishes clear, enforceable guardrails” for digital asset markets. The topline message: digital asset markets today operate with fragmented oversight, outdated rules, and legal uncertainty. The bill aims to bring these markets into a more well-defined regulatory framework, while preserving anti‑fraud and national security protections.
The legislation seeks to resolve the long‑running “who regulates what” debate by drawing clearer jurisdictional lines between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Committee materials emphasize that the bill relies on longstanding securities law principles to distinguish securities from commodities, preserves securities status for digital asset securities, and keeps SEC enforcement authority in place for those instruments and for primary offerings of certain “ancillary assets.”
The draft preserves the recent bipartisan compromise on stablecoin yield payments brokered by Senators Angela Alsobrooks (D-MD) and Thom Tillis (R-NC). The language, which the lawmakers shared on May 1, provides that a crypto firm shall not “directly or indirectly pay any form of interest or yield” to stablecoin users “solely in connection with the holding” of a stablecoin or “on a payment stablecoin balance in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.”
On the consumer and investor protection side, the market structure provisions would impose timely disclosure requirements, resale restrictions intended to reduce volatility and insider “pump‑and‑dump” behavior, and explicit preservation of federal anti‑fraud authority. The bill also preserves state consumer protections and emphasizes education and disclosure. It would require digital asset intermediaries to provide educational materials on digital asset risks, reporting obligations, and how to spot and report fraud. It also directs regulators to develop a coordinated financial literacy strategy with measurable goals. However, it still lacks an ethics provision, which Democrats have indicated is required for their support.
Fraud, AML, and National Security
A central theme of the Committee’s fact sheets is that the CLARITY Act “cracks down on fraud and money laundering” rather than loosening standards. To that end, the bill would apply Bank Secrecy Act (BSA) requirements to digital asset brokers, dealers, and exchanges, including anti‑money laundering (AML) and counter‑terrorist financing programs, suspicious activity reporting, customer identification, and sanctions compliance obligations. These obligations complement the GENIUS Act, which already extended BSA/AML requirements to permitted payment stablecoin issuers; CLARITY would carry them across the broader chain of digital asset intermediaries.
The draft also includes a targeted safe harbor allowing digital asset service providers and permitted payment stablecoin issuers to temporarily pause suspicious transactions at the request of law enforcement, as well as new registration and compliance requirements for digital asset kiosks. Kiosk operators would face obligations relating to customer warnings and receipts, anti‑fraud policies, risk monitoring, compliance staff, fraud detection, holding periods, and withdrawal limits.
On the national security side, the bill would create a new “Special Measure 6” authority, empowering Treasury to move quickly against foreign jurisdictions, institutions, or transaction types that pose primary money laundering concerns involving digital assets. It also calls for studies and reports on mixers, tumblers, cybersecurity vulnerabilities, and broader illicit finance risks, and includes a pilot to enhance information‑sharing between the private sector and federal law enforcement.
The Committee’s Myth vs. Fact materials explicitly push back on critiques that the bill would create loopholes for decentralized finance (DeFi), fail to address illicit finance, or criminalize software developers. The text is framed as targeting misconduct and intermediaries while protecting lawful code development and publication, and preserving self‑custody and peer-to-peer transactions.
Amendment Surge Sets Up a Contentious Markup
While Committee leadership is presenting the CLARITY Act as a balanced, bipartisan compromise, the amendment posture suggests that not all members are persuaded. Reports indicate that more than 100 amendments have been filed by Senators. For example, early reporting suggests that some of the proposals include blocking Federal Reserve master accounts for crypto companies and prohibiting crypto from being used as legal tender for paying taxes, which would significantly constrain how digital asset firms interact with the banking system and public sector.
Outside the hearing room, the lobbying campaign has intensified. Although the GENIUS Act already establishes a federal framework for permitted payment stablecoin issuers, banking groups are pressing for tighter limits on the ability of stablecoin issuers to offer yield or rewards, arguing that certain models could function as de facto deposit‑taking outside the insured banking system. Crypto industry stakeholders, in contrast, view the yield compromise as central to making the U.S. stablecoin market competitive with offshore offerings.
Key Issues to Watch in Tomorrow’s Session
Given this landscape, we expect several themes to dominate the markup hearing on May 14.
First, the allocation of jurisdiction between the SEC and CFTC. Members who have been critical of the SEC’s enforcement‑first approach may push for clearer or broader CFTC jurisdiction, while skeptics will focus on whether the proposal effectively narrows securities law coverage or constrains the SEC’s existing authority.
Second, the scope and strength of investor and consumer protections. Senators are likely to probe whether the bill’s disclosure, resale, and education provisions meaningfully parallel existing securities law protections, and whether any amendments would tighten or loosen those standards for digital asset securities and “ancillary assets.”
Third, AML, sanctions, and DeFi. Expect debate over how far to extend BSA obligations into DeFi, when centralized intermediaries that interface with DeFi protocols must satisfy BSA compliance and risk‑management standards.
Finally, treatment of stablecoins and the banking system. Amendments targeting master account access, legal tender status, and yield on stablecoins will be key signals of how far the Committee is willing to go either to integrate stablecoins into the regulated financial system or to wall them off from core banking infrastructure.