The Senate Banking Committee has scheduled a May 14 markup of the Digital Asset Market Clarity Act of 2025 (H.R. 3633), the most comprehensive crypto market structure bill to reach serious Senate consideration. The legislation would draw a statutory line between SEC and CFTC jurisdiction over dig...
The Senate Banking Committee has scheduled a May 14 markup of the Digital Asset Market Clarity Act of 2025 (H.R. 3633), the most comprehensive crypto market structure bill to reach serious Senate consideration. The legislation would draw a statutory line between SEC and CFTC jurisdiction over digital assets, replace regulation-by-enforcement with a codified framework, and establish seven objective criteria for determining when a blockchain-native token qualifies as a commodity rather than a security. The White House has set a July 4 target for passage.
The bill's most contested provision — stablecoin yield — was resolved via a May 1 bipartisan compromise by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD). The text bars crypto firms from paying deposit-equivalent interest on stablecoin balances while carving out activity-based rewards programs. Polymarket traders currently assign a 74% probability that the CLARITY Act becomes law in 2026, up from 40% at the year's low and 47% in late April. Circle stock rose 19.9% and Coinbase gained 6.1% on the compromise announcement.
The banking lobby remains opposed. The American Bankers Association warned that without stronger restrictions, up to $6.6 trillion in deposits could migrate to stablecoin platforms, threatening credit availability nationwide.
The CLARITY Act restructures U.S. crypto regulation around a single principle: control determines the regulator. The CFTC gains exclusive jurisdiction over "digital commodity" spot markets — assets whose underlying blockchain systems are sufficiently decentralized. The SEC retains authority over primary-market transactions involving digital assets that qualify as securities and over tokens issued by entities that maintain centralized control.
This replaces the current system in which the SEC has asserted broad jurisdiction through enforcement actions, most notably via the Howey test applied to secondary-market token trading. Under the CLARITY Act, a token originally sold as part of an investment contract can transition to commodity status once its underlying network meets statutory decentralization thresholds.
The bill builds on the Financial Innovation and Technology for the 21st Century Act (FIT21), which the House passed on May 22, 2024, by a vote of 279-136 but stalled in the Senate. The CLARITY Act passed the House on July 17, 2025, with broader bipartisan support — 294 to 134, including 78 Democratic votes. According to Arnold & Porter's legislative analysis, the bill improved upon FIT21 with stronger consumer protections, clearer decentralization standards, and better alignment with existing regulatory models.
The bill's most technically significant contribution is codifying when a blockchain system qualifies as "mature" — the threshold at which its native token ceases to be treated as a security. The CLARITY Act sets seven objective, measurable criteria:
An issuer may file a notice with the SEC declaring that its asset either already meets these criteria or expects to within four years. During the transition period, the SEC retains secondary oversight but cannot unilaterally block trading on CFTC-regulated venues.
The stablecoin yield question stalled the bill for months. At its core: should crypto platforms be permitted to pay returns on stablecoin balances? The GENIUS Act, signed into law in 2025, prohibited stablecoin issuers from paying interest directly but left a gap — third-party platforms like Coinbase could still offer rewards on user USDC balances, which banks characterized as a deposit-equivalent loophole.
The May 1 compromise text addresses this by:
The distinction matters financially. Coinbase generated $1.35 billion in stablecoin revenue in FY2025, approximately 19.6% of total net revenue. However, analysts note that Coinbase largely passes yield through to users, meaning the net earnings impact of the compromise may be limited. Circle, whose USDC is the primary stablecoin distributed through Coinbase, saw its stock rise 19.9% on the compromise announcement. Coinbase gained 6.1%.
The American Bankers Association (ABA), the Bank Policy Institute, and allied trade associations oppose the current text. Their primary objection centers on Section 404, which permits stablecoin issuers to offer rewards based on a holder's balance and holding duration — a structure the banking lobby argues is functionally indistinguishable from paying interest.
In a joint letter sent May 8 to Senate Banking Committee leadership, the coalition demanded "important technical refinements" to the yield language. The ABA's state-by-state analysis projected that up to $6.6 trillion in deposits could migrate to stablecoin platforms if the distinction between rewards and interest remains ambiguous, threatening credit availability for households and businesses.
The banking lobby has additional leverage: Chairman Scott wants all 13 Republican committee members on board before proceeding to markup. Any defection narrows the margin for bipartisan passage. The markup is scheduled for May 14 at 10:30 AM, and Scott has indicated he wants the bill cleared before the May 21 Memorial Day recess — leaving one week for further negotiations.
Section 601 of the CLARITY Act introduces Exchange Act §15H, creating explicit safe harbors for blockchain developers. Under this provision, developers who publish, maintain, or relay transactions on distributed ledger networks are not subject to Exchange Act registration requirements solely for those activities.
The bill distinguishes between code and control:
This framework contrasts with the EU's Markets in Crypto-Assets (MiCA) regulation, which applies licensing requirements more broadly and has drawn criticism from DeFi developers for potentially capturing non-custodial protocol operators. More than 100 crypto firms signed a letter on April 23 urging the Senate to proceed with the markup, citing the developer protections as a key differentiator from European regulatory approaches.
Granting the CFTC exclusive jurisdiction over crypto spot markets raises a practical question: can the agency handle it? The CFTC's FY2025 budget was approximately $400 million — roughly one-tenth of the SEC's. The agency has historically focused on derivatives markets, not spot trading.
The companion Digital Commodity Intermediaries Act (DCIA), which the Senate Agriculture Committee advanced on January 29 on a party-line vote, addresses this by authorizing the CFTC to charge initial and annual registration fees to digital commodity exchanges, brokers, dealers, and qualified custodians. The DCIA also grants expedited hiring authority for examinations, enforcement, and policy staff.
Whether the DCIA passes alongside or is folded into the CLARITY Act remains an open procedural question. Without dedicated funding, the CFTC's capacity to oversee a market that processed over $75 billion in daily spot volume in April 2026 is uncertain.
The calendar is tight:
| Date | Event | |------|-------| | May 1, 2026 | Tillis-Alsobrooks stablecoin yield compromise released | | May 8, 2026 | Banking lobby sends joint letter demanding refinements | | May 9, 2026 | Senate Banking Committee confirms May 14 markup | | May 14, 2026 | Scheduled markup at 10:30 AM | | May 21, 2026 | Memorial Day recess begins | | June-July 2026 | Targeted Senate floor vote | | July 4, 2026 | White House target for presidential signature |
White House crypto adviser Patrick Witt stated at Consensus Miami on May 6 that the administration is targeting a July 4 passage date. This requires Senate floor action in June and a conference committee or House concurrence on any Senate amendments before the July deadline.
The January postponement — the bill was originally scheduled for a January markup that was pulled — underscores the fragility of the timeline. Previous crypto legislation (FIT21) passed the House but never received a Senate vote. The CLARITY Act's path depends on maintaining bipartisan support through markup, floor amendments, and reconciliation with the House version.
Polymarket's "Clarity Act signed into law in 2026?" contract, with $651,800 in total volume, currently shows 74% probability for passage. The contract hit a low of 40% earlier in the year and peaked at 82% on February 20. The 21-point single-day jump following Chairman Scott's April 30 comments represents the largest swing in the contract's history.
Bitcoin crossed $80,000 on May 4, driven by a confluence of factors including the stablecoin yield compromise, Iran-U.S. de-escalation, and $630 million in single-day spot Bitcoin ETF inflows on May 1. Bitcoin has gained 19% over the past month, outperforming the S&P 500's approximately 10% return over the same period.
The legislative progress has also accelerated corporate activity. Kraken parent Payward announced a $600 million acquisition of Hong Kong-based stablecoin payments firm Reap Technologies on May 7, following its up-to-$550 million acquisition of U.S. derivatives platform Bitnomial. Both deals are structured around the assumption that a clear U.S. regulatory framework is imminent.
The CLARITY Act represents the U.S. government's most advanced attempt to codify crypto market structure regulation. Its progress from a stalled January markup to a confirmed May 14 hearing reflects genuine bipartisan momentum, driven by the stablecoin yield compromise and sustained White House pressure.
The bill's economic implications are material. By shifting the majority of crypto tokens from SEC to CFTC jurisdiction, it would reduce compliance costs for projects that meet the decentralization criteria, potentially accelerate institutional participation, and create a statutory framework that venture capital and corporate treasury allocators can underwrite against. The developer safe harbors provide legal clarity that the current enforcement-driven regime does not.
The risks are equally concrete. The banking lobby's $6.6 trillion deposit-migration estimate, while likely overstated for political effect, reflects a real competitive concern: stablecoin platforms that can offer transaction-based rewards while holding dollar-equivalent reserves operate on a fundamentally different cost structure than traditional banks. The CFTC's capacity to absorb spot-market oversight without dedicated funding is a genuine operational constraint, not a theoretical one.
Whether the July 4 target holds depends on three variables: the May 14 markup producing a committee-passed bill, the Senate floor scheduling a vote before the July recess, and the House accepting or quickly reconciling Senate amendments. Each step has failed for previous crypto legislation. The data suggests the odds are better this time. The outcome remains uncertain.