The U.S. Senate Banking Committee is scheduled to mark up the Digital Asset Market Clarity Act (CLARITY Act) on May 14, 2026 at 10:30 a.m. in the Dirksen Senate Office Building. The markup represents the furthest a comprehensive crypto market structure bill has advanced in the Senate and sets up ...
"We cannot allow members of Congress, senior administration officials, presidents, or vice presidents to get rich off of these industries because of their insider status." — Sen. Kirsten Gillibrand, speaking at Consensus Miami 2026
The U.S. Senate Banking Committee is scheduled to mark up the Digital Asset Market Clarity Act (CLARITY Act) on May 14, 2026 at 10:30 a.m. in the Dirksen Senate Office Building. The markup represents the furthest a comprehensive crypto market structure bill has advanced in the Senate and sets up the first real legislative test for a framework that would divide regulatory authority over digital assets between the SEC and CFTC.
The bill cleared the House in July 2025 but stalled in the Senate for ten months over three unresolved disputes: stablecoin yield restrictions, DeFi protocol exemptions, and ethics rules for government officials with crypto holdings. A compromise brokered by Sens. Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) in early May resolved the stablecoin yield question — at least on paper. Five banking trade groups rejected the compromise language on May 8, three days before the markup. Polymarket traders currently price passage into law at 75%, up from 45% two weeks ago. The White House has set a July 4 target for the president's signature.
The stakes extend beyond Washington. The CLARITY Act would establish the first statutory classification system for digital assets in the United States, affecting an industry with approximately $2.81 trillion in total market capitalization as of May 2026.
The Digital Asset Market Clarity Act of 2025 (H.R. 3633), commonly referred to as the CLARITY Act, establishes the first comprehensive federal regulatory framework for digital assets. The bill passed the House of Representatives in July 2025 and was referred to the Senate Banking Committee, where it has been under revision since.
The legislation addresses a structural gap in U.S. financial regulation: digital assets currently exist in a jurisdictional gray zone between the SEC and CFTC, with neither agency holding clear statutory authority over most crypto markets. Since March 2026, both agencies have operated under a joint interpretation framework issued on March 17 that classified most digital assets as non-securities, but that guidance lacks the force of statute and can be reversed by future administrations.
The CLARITY Act would codify the division of authority and create registration pathways for exchanges, brokers, and custodians handling digital assets. It builds on the GENIUS Act (signed into law July 18, 2025), which established the regulatory framework for payment stablecoins, by extending market structure rules to the broader digital asset ecosystem.
The bill divides digital assets into three statutory categories, each with a designated primary regulator:
1. Digital Commodities (CFTC jurisdiction). Tokens tied to decentralized blockchain networks, including Bitcoin and other assets meeting "maturity" criteria. The CFTC would have exclusive authority over anti-fraud and anti-manipulation in spot markets for these assets and would register and supervise exchanges, brokers, and dealers.
2. Investment Contract Assets (SEC jurisdiction). Tokens representing equity, debt, profit-sharing rights, or similar investment instruments. The SEC retains full securities law authority over these assets.
3. Permitted Payment Stablecoins (banking regulator jurisdiction). Already covered under the GENIUS Act. Subject to capital, custody, reserve, and anti-manipulation standards enforced by the OCC, Federal Reserve, and state regulators.
To qualify as a "digital commodity" exempt from securities regulation, a blockchain must meet four maturity criteria under the bill: (1) be functional for executing transactions; (2) run on open-source code; (3) operate on pre-established, transparent rules; and (4) not be controlled by any single person or group holding 20% or more of the token supply.
This classification system has direct economic implications. According to the joint SEC-CFTC framework issued in March 2026, "most digital assets" fall into the commodity category. If codified by the CLARITY Act, this would shift the default regulatory posture for the majority of tokens from securities enforcement to commodities oversight — a lighter-touch regime with lower compliance costs for issuers.
The most contentious provision heading into markup concerns Section 404: stablecoin yield restrictions. The core question is whether crypto platforms can offer interest-like returns on stablecoin holdings — a practice that banks argue competes directly with deposit accounts.
The Tillis-Alsobrooks compromise, released in early May, draws the following line:
Prohibited: Rewards or yields on stablecoin balances that are "economically or functionally equivalent to the payment of interest on an interest-bearing bank deposit."
Permitted: Incentives tied to "bona fide activities" — payments, transfers, trading, and other genuine platform usage. Token balances and holding duration can factor into reward calculations, provided the structure does not cross the "deposit equivalence" threshold.
According to CoinDesk, reporting on May 1, the compromise text preserves room for programs like Coinbase's USDC rewards, which are structured as usage incentives rather than passive yield. Circle's stock jumped nearly 20% on May 4 following reports of the compromise language, according to CNBC.
The compromise effectively creates a two-tier system: regulated stablecoin yield for bank-like products, and a permissive regime for activity-based rewards. On-chain DeFi protocols operating without U.S.-licensed custodians or issuers fall largely outside the compromise's scope — a policy tradeoff that multiple legal analyses have identified as potentially channeling yield-seeking behavior into less regulated venues.
Five banking trade associations — the American Bankers Association (ABA), Bank Policy Institute (BPI), Consumer Bankers Association, Independent Community Bankers of America (ICBA), and National Bankers Association — issued a joint statement on May 8 rejecting the Tillis-Alsobrooks compromise.
The coalition's core argument, as reported by the ABA Banking Journal: "Payment stablecoin yield, or incentives that act like yield, can reduce U.S. deposits and, in turn, banks' capacity to extend credit across the country."
The ABA specifically objected that the "bona fide activity" carve-out is broad enough to permit most existing yield-bearing stablecoin products with minimal restructuring. According to their analysis, platforms could satisfy the activity requirement through trivial qualifying actions — logging into a platform, acknowledging a terms update, or holding a small governance token balance.
The timing of the joint statement — six days before the markup — was characterized by multiple outlets as a last-ditch effort to delay or amend the bill. According to crypto.news, reporting on May 9, banking lobbyists were "scrambling" to secure amendments ahead of the May 14 session.
Sens. Cynthia Lummis (R-WY) and Tillis publicly accused the banking lobby of attempting to kill the CLARITY Act outright. According to CoinDesk, Lummis stated that the banking industry's opposition was "not about refining the bill — it's about preventing any framework that legitimizes stablecoin competition."
Sections 309 and 409 of the CLARITY Act carve out exemptions for decentralized finance activities from both SEC and CFTC regulation, though both agencies retain anti-fraud and anti-manipulation enforcement authority.
Exempted activities include: validating transactions, publishing and updating open-source software, developing wallets, providing user interfaces for blockchain networks, and developing blockchain systems.
The SEC has separately indicated it will establish safe harbors for specific DeFi user interfaces, potentially allowing decentralized exchanges like Uniswap and lending protocols like Aave to continue operating without broker-dealer registration, provided they meet interface criteria.
The practical effect: DeFi protocols that are sufficiently decentralized (meeting the 20% concentration threshold and other maturity criteria) would operate under a lighter regulatory framework than centralized exchanges. This aligns with the bill's broader logic — that decentralized systems pose different risk profiles than intermediated platforms — but critics argue it creates regulatory arbitrage opportunities that could undermine consumer protection.
Sen. Gillibrand has publicly conditioned her support on the inclusion of ethics provisions banning crypto insider trading by government officials. Speaking at Consensus Miami 2026, she stated that the bill "can't advance from the Senate" without such a provision, according to CoinDesk reporting from May 6.
The ethics dispute is politically loaded. President Trump's personal business interests in crypto ventures — including the World Liberty Financial (WLFI) token and other digital asset enterprises — have drawn scrutiny from Democrats. The White House has rejected characterizations of these interests as conflicts and, according to reports from Unchained Crypto, has signaled it "won't tolerate a bill that targets" the president.
This creates a procedural bottleneck. If Gillibrand and like-minded Democrats withhold support, the bill may lack the votes to clear the Banking Committee or survive a floor vote. The committee's 13-11 Republican majority means only one Republican defection combined with unified Democratic opposition could block markup.
Sen. Gallego (D-AZ) and Sen. Alsobrooks (D-MD) are viewed as potential Democratic crossover votes, according to CryptoTimes reporting on May 11. Their positions on the ethics question will likely determine whether the bill advances.
The White House has set an aggressive timeline. Patrick Witt, executive director of the President's Council of Advisors for Digital Assets, publicly stated a July 4 target for presidential signature, speaking at Consensus Miami 2026 on May 6, according to CoinDesk.
The implied schedule:
| Milestone | Target Date | |---|---| | Senate Banking Committee markup | May 14, 2026 | | Senate floor vote | June 2026 (four working weeks) | | House reconciliation vote | Late June 2026 | | Presidential signature | July 4, 2026 |
Sen. Bernie Moreno (R-OH) told reporters that crypto market structure legislation is expected to be completed by end of May. Sen. Gillibrand offered a longer timeline at Consensus, suggesting the Senate may vote by August 10 — a date that would miss the White House's July 4 target.
Over 120 crypto industry groups, including Coinbase and Ripple, sent a joint letter urging the Senate Banking Committee to advance the bill, according to DL News.
Polymarket's "Clarity Act signed into law in 2026?" contract has generated $651,800 in total trading volume since launching on January 11, 2026. The current implied probability stands at 75%, up from 45% two weeks prior and 61% on May 2 when the stablecoin compromise first surfaced.
The odds trajectory:
Circle (CRCL) jumped nearly 20% on May 4 following reports of the stablecoin yield compromise, per CNBC. The total crypto market capitalization sits at approximately $2.81 trillion as of May 2026, with Bitcoin at roughly $80,600-$82,300, according to CoinMarketCap and Fortune.
The bill's passage or failure carries significant implications for the economic structure of U.S. crypto markets. Codifying the three-category classification system would shift the compliance cost curve for hundreds of token projects. Under current ambiguity, projects face potential enforcement from both the SEC and CFTC; under the CLARITY Act, most would face only CFTC oversight, with lower registration and reporting burdens.
For the stablecoin sector specifically, the yield compromise creates a defined — if contested — boundary between banking products and crypto rewards. The economic value at stake is substantial: total stablecoin market capitalization exceeds $230 billion as of May 2026, and yield programs are a primary user acquisition channel for platforms like Coinbase, which reported USDC-related revenue as a significant line item in its Q1 2026 earnings.
The May 14 markup is the first committee-level vote on a comprehensive U.S. crypto market structure bill in the Senate. The CLARITY Act passed the House in July 2025 but has been stalled in the Senate for ten months.
The stablecoin yield compromise permits activity-based rewards while banning deposit-equivalent yield. Five major banking trade groups rejected the language on May 8, calling the "bona fide activity" carve-out too permissive.
The DeFi exemption carves out sufficiently decentralized protocols from SEC and CFTC registration. Protocols must meet a 20% token concentration threshold and other maturity criteria to qualify.
The ethics dispute remains unresolved. Sen. Gillibrand has conditioned her vote on a ban on crypto insider trading by government officials. The White House has resisted provisions perceived as targeting the president.
Prediction markets price 75% odds of passage in 2026. The White House targets July 4 for signature; Sen. Gillibrand has suggested August 10 for a Senate floor vote.
The three-category asset classification system — digital commodities, investment contract assets, and payment stablecoins — would codify the SEC-CFTC joint framework issued March 17, 2026, giving it statutory permanence.
The May 14 markup is a procedural milestone, not a finish line. Even if the bill clears the Banking Committee, it faces a Senate floor vote, reconciliation with the House version, and signature — all within approximately seven weeks if the White House timeline holds.
The banking industry's opposition to the stablecoin yield language and the unresolved ethics dispute represent the two most likely points of failure. The Tillis-Alsobrooks compromise resolved the policy question of whether crypto platforms can offer stablecoin rewards; it did not resolve the political question of whether five banking trade groups representing the majority of U.S. bank deposits will accept any framework that permits stablecoin competition with savings products.
The DeFi exemptions present a longer-term structural question. By exempting sufficiently decentralized protocols from registration requirements while subjecting centralized platforms to SEC and CFTC oversight, the CLARITY Act creates a regulatory gradient that may accelerate capital migration toward on-chain venues — precisely the outcome the bill's DeFi provisions were designed to enable, and precisely the outcome centralized intermediaries and their regulators may come to challenge.
For market participants, the binary outcome of the May 14 vote — advance or stall — will determine whether the U.S. establishes a statutory framework for digital assets in 2026 or defers the question to the next Congress, with midterm elections in November creating a narrowing legislative window.