Yesterday, the Senate Banking, Housing, and Urban Affairs Committee held a hearing and voted 15–9 to advance H.R. 3633, the Digital Asset Market Clarity Act of 2025 (the CLARITY Act), sending the first comprehensive Senate crypto market structure bill to the floor.
In the majority press release, Chairman Tim Scott (R‑SC) framed the markup as a “historic” bipartisan step after nearly a year of negotiations, emphasizing that the legislation is intended to bring clearer rules, stronger safeguards, and a more transparent framework for everyday digital assets market participants. Two Democrats, Senators Angela Alsobrooks (D‑MD) and Ruben Gallego (D‑AZ), joined Committee Republicans to support the bill. Senator Alsobrooks also played a leading role in shaping the compromise language on stablecoin yield.
The CLARITY Act would create a federal regulatory framework for cryptocurrencies and other digital assets by clarifying the division of authority between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), codifying core conduct and disclosure obligations for intermediaries, and integrating anti‑fraud and anti‑money‑laundering requirements into the digital asset ecosystem.
A key flashpoint is how the bill permits limited payments on GENIUS Act-permitted payment stablecoin balances to enable innovation, competition, and consumer adoption while protecting bank deposits and depository institutions’ key functions in the economy of the United States. As drafted, the bill offers a compromise by permitting certain activity-based and transaction-based rewards and incentives on payment stablecoin balances. Under the final compromise, stablecoin users may still receive bona fide activity‑ or transaction‑based rewards (such as incentives tied to actual use of the stablecoin for payments or other qualifying transactions) so long as those rewards are not economically or functionally equivalent to interest on a bank deposit. The bill then directs the SEC, CFTC, and U.S. Department of the Treasury to undertake joint rulemaking within one year to clarify the line between prohibited “interest‑like” returns and permissible activity and transaction‑based rewards, including a non‑exhaustive list of qualifying examples. As reported by the American Bankers Association, banking trade associations have backed the Committee’s move toward a statutory framework, but are pressing for the bill to be tightened further to ensure that stablecoin issuers and exchanges cannot sidestep existing restrictions on interest or yield, while still allowing rewards in connection with certain transactional uses.
The markup was not without controversy, particularly on financial crime and national security issues. And, while the bill advanced with bipartisan support, several Committee members criticized the decision to rule certain amendments out of order and indicated they supported advancing the bill based on good‑faith negotiations, but would seek further changes before a floor vote, particularly on illicit finance and ethics. On the same day, Committee minority staff released a national security advisory arguing that the current draft “fails to address key vulnerabilities” exploited by criminals, terrorists, and foreign adversaries. Drawing on open‑source intelligence and law enforcement reports, the advisory contends that the bill does not fully adopt global anti‑money‑laundering standards for crypto platforms, leaves some DeFi‑related businesses outside basic illicit‑finance requirements, and fails to close perceived gaps related to mixers such as Tornado Cash and the use of stablecoins to evade U.S. sanctions. The memo highlights six threat categories, including increased use of crypto by drug cartels, terrorist organizations, rogue states, and ransomware operators.
Despite these divisions, the Committee’s bipartisan action signals growing Senate appetite to move away from a “regulation‑by‑enforcement” approach and toward clearer statutory rules of the road for digital assets.