The Senate Banking Committee took a big step forward for the cryptocurrency industry on Thursday, May 14, advancing long-stalled legislation to establish clear rules for digital assets. The committee approved the Digital Asset Market Clarity Act, known as the Clarity Act, by a 15-9 vote.
Two Democrats, Sens. Ruben Gallego of Arizona and Angela Alsobrooks of Maryland, joined all Republicans in support. The move gives the bill momentum as it heads to the full Senate.
Sen. Thom Tillis, a key Republican negotiator, called the outcome the result of months of bipartisan talks.
Clarity Act to End Years of Confusion
The bill seeks to end years of confusion by splitting oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. It spells out when a token counts as a security and when it counts as a commodity.
“This legislation does not take sides between traditional finance and new technology,” Senate Banking Committee Chairman Tim Scott said at the start of the session.
The Clarity Act would create registration rules for crypto exchanges, brokers, and dealers. It includes protections for developers working on decentralized finance projects and adds safeguards meant to fight illicit finance.
On stablecoins, the dollar-backed tokens that became law in a separate bill last year, the measure includes compromise language on yields and rewards after heavy lobbying from banks.
Banking groups had pushed hard to tighten those provisions, worried that crypto firms could pull deposits away by offering interest-like rewards.
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The American Bankers Association urged its members to contact senators right before the vote. Despite that effort, the bill moved ahead largely as negotiated.
The Clarity Act Gets Strong Industry Backing, Sharp Democratic Criticism
The crypto industry poured more than $119 million into supporting pro-crypto candidates in the 2024 elections and has waited years for such a framework.
Supporters say the clarity act rules will finally give companies and investors the legal certainty they need to grow in the United States rather than move overseas.
Not everyone agrees. Sen. Elizabeth Warren, the committee’s top Democrat, warned the bill favors crypto companies at the expense of everyone else.
“Our job is to serve the American people,” Warren said during the markup. “Our job is not to advance a pro-industry crypto bill that will put American consumers, American investors, and our national security and our financial system at risk.”
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Many Democrats worry that the anti-money laundering rules are not strict enough. Some also want provisions to stop political officials from profiting off crypto ventures.
The 15-9 vote crossed party lines just enough to keep the bill alive. Analysts had said one or two Democratic yes votes in committee would improve its chances on the Senate floor, where it will need at least seven Democrats to reach the 60 votes required to beat a filibuster.
The House passed its version of the Clarity Act last year. If the Senate can finish its work this year, the two chambers would need to reconcile differences before sending a final bill to President Trump, who has made crypto reform a priority.
What is Next and Why it Matters
Some parts of the bill still need to be fine-tuned before a full Senate vote. Tougher issues, such as consumer protections and ethics rules, are likely to remain up for negotiation.
For the crypto world, the stakes are high as Bitcoin, Ethereum, and thousands of other tokens now sit in the portfolios of millions of Americans.
Without clear federal rules, companies have operated in a gray area where the SEC and CFTC sometimes overlap or clash.
The Clarity Act seeks to give clear rules by giving the CFTC primary jurisdiction over digital commodities traded on decentralized networks, while the SEC retains oversight of assets that are more like securities.
It also creates a path for tokens to switch categories as projects mature and become more decentralized.
Critics fear the changes could open the door to more fraud or financial instability, while supporters believe that smart regulation will make the market safer and help the U.S. stay competitive with countries racing ahead in digital assets, such as China.
