The U.S. Senate Banking Committee convened at 10:30 AM ET on May 14 for the first formal markup of the 309-page Digital Asset Market CLARITY Act (H.R. 3633), the most comprehensive crypto market structure legislation attempted by Congress. The bill, which passed the House 294–134 in July 2025, as...
"No bill should move through the Banking Committee without real ethics guardrails. Trump and his family have raked in at least $1.4 billion in gains from crypto deals alone." — Senator Elizabeth Warren (D-MA), Senate Banking Committee Member
The U.S. Senate Banking Committee convened at 10:30 AM ET on May 14 for the first formal markup of the 309-page Digital Asset Market CLARITY Act (H.R. 3633), the most comprehensive crypto market structure legislation attempted by Congress. The bill, which passed the House 294–134 in July 2025, assigns the Commodity Futures Trading Commission jurisdiction over decentralized digital commodity spot markets and retains Securities and Exchange Commission authority over initial token sales and investment-contract assets.
The markup arrives under heavy crossfire. Committee members filed more than 130 proposed amendments, 44 from Senator Elizabeth Warren alone, targeting stablecoin yield rules, DeFi exemptions, ethics provisions, and a central bank digital currency ban. The American Bankers Association mobilized over 8,000 letters to Senate offices in the days preceding the vote, warning that stablecoin yield provisions could trigger a "flight of bank deposits" and scale the stablecoin market from approximately $300 billion to $2 trillion. The 13-to-11 Republican majority on the panel means Chairman Tim Scott needs every GOP vote; Senator John Kennedy (R-LA) confirmed his support only days before the session.
The CLARITY Act, combined with the already-enacted GENIUS Act (passed 68–30 in the Senate), would create the first complete federal regulatory architecture for digital assets in the United States. The White House has publicly targeted July 4, 2026, for a signing ceremony.
The CLARITY Act has traveled a protracted legislative path. Representative French Hill introduced the bill on May 29, 2025. It passed the House on July 17, 2025, with a 294–134 vote — all 216 Republicans in favor, joined by 78 Democrats. The margin indicated a degree of bipartisan acceptance rare for crypto legislation.
Senate progress stalled. Chairman Tim Scott initially targeted a September 2025 committee vote. White House crypto adviser David Sacks announced a January 2026 markup session, which Scott subsequently postponed rather than risk a failed vote. The committee rescheduled the markup for May 14, 2026, releasing an expanded 309-page draft — up from the 278-page version circulated in January.
The May 14 session is a committee markup, not a full Senate floor vote. If the bill clears committee, it advances to Senate debate and an eventual floor vote. Senate passage would require reconciliation with the House version before reaching the president's desk.
The CLARITY Act's core architecture divides digital assets into three regulatory buckets:
Digital Commodities (CFTC jurisdiction). Tokens linked to decentralized blockchains where no single entity or affiliated group controls 20% or more of the token supply or voting power. The underlying system must be functional, open-source, governed by transparent rules, and not subject to unilateral control. Bitcoin is the clearest qualifying asset. Ethereum, Solana, and other networks with distributed governance structures would likely qualify, though edge cases will require regulatory interpretation.
Investment Contract Assets (SEC jurisdiction). Tokens representing equity, debt, profit-sharing rights, or similar interests sold through arrangements constituting investment contracts. The SEC retains authority over initial token offerings and secondary trading of assets that do not meet decentralization thresholds. The bill envisions a certification process through which projects can apply to transition from SEC to CFTC oversight as they achieve sufficient decentralization.
Payment Stablecoins (banking regulator jurisdiction). Dollar-backed stablecoins supervised by banking regulators under standards established by the separately enacted GENIUS Act, which sets capital, custody, reserve, and anti-manipulation requirements for issuers.
The 20% threshold is the bill's most technically consequential provision. Projects must demonstrate that insiders — developers, venture investors, foundations — collectively hold less than 20% of the total token supply before the asset can graduate from SEC oversight to CFTC commodity treatment. Critics have noted the threshold could incentivize artificial token distribution through airdrops or shell entities while founders retain de facto control through off-chain agreements or governance mechanisms not captured by the on-chain ownership metric.
The most contentious single provision concerns whether stablecoin issuers can pay yield to holders. Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) negotiated a compromise: issuers are prohibited from paying interest solely for holding stablecoins — activity deemed functionally equivalent to bank deposits — but rewards tied to active use, such as payments, transfers, or protocol participation, remain permitted.
The distinction matters because the stablecoin market currently stands at approximately $300 billion. According to the American Bankers Association, if yield-bearing stablecoins were permitted broadly, the market could scale to $2 trillion, drawing deposits away from the traditional banking system and reducing credit available to consumers and businesses.
The banking industry views this compromise as insufficient. Six major banking trade groups — the ABA, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America, and National Bankers Association — issued a joint statement warning that the current language still permits "interest-like rewards" that could erode bank funding.
Crypto industry participants, including Coinbase and Circle, have backed the Tillis-Alsobrooks compromise as a reasonable middle ground. According to CoinDesk, Coinbase reversed its opposition to the bill in April 2026 after the yield compromise and DeFi exemption provisions were included.
Section 409 of the CLARITY Act carves out decentralized finance activities from intermediary registration requirements. Under the provision, persons engaged in the following activities would not be classified as brokers, dealers, or exchanges:
The exemption applies only where developers do not take custody of user assets or exercise control over user funds. Platforms that maintain the ability to block users, operate with private permissions, or retain hard-coded special privileges would not qualify and would be treated as financial institutions subject to Bank Secrecy Act reporting, sanctions compliance, and suspicious activity monitoring.
Section 605 — renamed the "Keep Your Coins Act" in the Senate draft — prohibits federal agencies from restricting individuals' ability to self-custody digital assets using self-hosted wallets for lawful purposes. The provision explicitly preserves regulators' enforcement authority over illicit finance, sanctions violations, and fraud.
These provisions represent the first time self-custody protections and DeFi developer safe harbors would be written into federal statute. Their inclusion was cited as a condition for crypto industry support of the broader bill.
The sharpest political divide concerns conflict-of-interest provisions. Democrats, led by Senators Warren and Kirsten Gillibrand, have stated the bill cannot pass the full Senate without ethics guardrails preventing government officials from profiting from crypto ventures.
Senator Warren filed 44 amendments ahead of the markup, many targeting what she described as "$1.4 billion in gains" from crypto deals by the Trump family during the current administration. Democrats argue the bill, as drafted, contains no provisions addressing such conflicts.
The committee's jurisdiction presents a procedural complication: conflict-of-interest rules for government officials fall outside the Banking Committee's jurisdiction. White House crypto adviser Patrick Witt has stated the administration supports rules that apply "across the board, from the president all the way down to the brand new intern on Capitol Hill," but rejects any provision singling out a specific officeholder.
This impasse represents the most significant threat to the bill's advancement through the full Senate, where 60 votes are needed to overcome a filibuster and Democratic support is therefore essential.
The banking lobby's opposition extends beyond the stablecoin yield question. In the week preceding the May 14 markup, the American Bankers Association circulated a call-to-arms to bank executives nationwide, generating more than 8,000 letters to Senate offices.
The banking industry's core argument: stablecoins that offer yield-like returns, even those tied to active use rather than passive holding, function as deposit substitutes outside the regulatory perimeter that governs banks. Traditional depository institutions face capital requirements, FDIC insurance obligations, and Community Reinvestment Act compliance. Stablecoin issuers, even under the GENIUS Act's licensing regime, face a lighter burden.
According to the ABA Banking Journal, the association urged the committee to tighten the definition of prohibited yield to close any pathway for rewards that could be characterized as interest by another name. The banking lobby's position is that the current language creates a regulatory arbitrage that could accelerate deposit flight from the $17.5 trillion U.S. commercial banking system.
The crypto industry has invested heavily in the legislative process. More than 120 organizations — including Coinbase, Ripple, Kraken, Circle, Chainlink Labs, and Andreessen Horowitz — signed a joint letter on April 23, 2026, urging the Senate to advance the CLARITY Act.
Political spending has been substantial. The Fairshake political action committee raised $202 million for pro-crypto candidates across both parties, with 71% of funding from three sources: Coinbase, Ripple, and Andreessen Horowitz. Fairshake spent $132 million during the most recent election cycle.
The Stand With Crypto advocacy group ran a petition campaign specifically targeting the Senate Banking Committee, urging members to schedule the markup that ultimately materialized on May 14.
The May 14 markup is the first gate in a multi-step Senate process:
Concurrently, the GENIUS Act's implementing regulations are due from federal and state regulators by July 18, 2026, creating a parallel rulemaking track for stablecoin oversight.
The CLARITY Act markup represents the furthest any comprehensive crypto market structure bill has advanced in the U.S. Senate. Its three-tier classification framework would, for the first time, draw clear jurisdictional lines between the SEC and CFTC on digital assets — a question that has generated over a decade of regulatory ambiguity and enforcement-by-litigation.
The bill's passage through committee appears likely given the secured Republican majority. Passage through the full Senate is less certain. The 60-vote threshold requires Democratic cooperation, and Democrats have tied their support to ethics provisions that the White House has resisted in their proposed form. The stablecoin yield compromise satisfies neither the banking lobby nor the most aggressive crypto industry participants, suggesting further revision before a floor vote.
The economic stakes are concrete. A $300 billion stablecoin market, a $323 billion broader stablecoin regulatory framework under the GENIUS Act, and the regulatory classification of thousands of tokens representing hundreds of billions in market capitalization all hinge on the final text. The outcome will determine whether the U.S. crypto industry operates within a codified federal framework or continues under the patchwork of enforcement actions and agency guidance that has characterized the previous decade.