Crypto's Hopes for Senate's Clarity Act Remain Alive Despite Tight Deadline

Although April is likely a lost month for the crypto Clarity Act, a U.S. Senate committee hearing scheduled for May could potentially keep the crucial market structure legislation alive, provided it reaches a final Senate vote by July, according to lawmakers and lobbyists closely following the bill's sluggish progress. The legislative calendar is running low on time for this year, but a Senate aide indicated that a potential delay of a couple of weeks to allow Republican Senator Thom Tillis to finalize discussions with bankers over stablecoin-yield concerns is not yet pushing the work past the point of no return. Earlier negotiations over decentralized finance (DeFi) protections are reportedly settled, leaving few other obstacles in the way of committee approval. One of the main challenges the crypto industry faces is the banking sector's objections to stablecoin rewards, but if this hurdle can be overcome, the Senate Banking Committee hearing that the bill needs to clear would be only the first step in a lengthy process. The Senate will essentially be in recess from August and in election mode until the November congressional midterms, with about a dozen weeks of work scheduled before the elections, and several pressing matters to address during that time. If the bill manages to get signoff from the Senate Banking Committee, the text needs to be merged with the version that passed the Senate Agriculture Committee, and the final legislation would likely be revised further as lawmakers add their final compromise on an ethics piece. The bill may win enough Democratic support to pass if they can resolve the dispute over appointing a full slate of commissioners to oversee markets regulation. Then the House would need to approve it again, which would be expected to go quickly, as long as further disagreements don't arise. The last step, President Trump's signature, is expected to be the easiest, though he inserted some uncertainty in March when he said he wouldn't sign any bill until he gets legislation approved that would demand voters prove their citizenship before they can cast ballots. The Digital Asset Market Clarity Act, if approved, would become the second major crypto bill to become law, joining last year's Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. However, an unresolved stablecoin matter from the GENIUS Act has delayed progress on the Clarity Act since the start of the year, as bank lobbyists have drawn enough support from senators to back their worry that stablecoin rewards programs could jeopardize the banks' business model. The debate has raged on, with crypto insiders, including Coinbase's Chief Legal Office Paul Grewal, pushing for the allowance of some rewards that don't look like interest on core bank deposits. Though key Senate negotiators had recently said they had an 'agreement in principle' to move forward with a compromise, Republican Senator Tillis told reporters that earlier hopes for April progress were likely slipping into May. The White House has leaned into the crypto position on allowing some rewards, and Patrick Witt, a top crypto adviser in Trump's White House, said that further lobbying by banks on this issue could be motivated by greed or ignorance. Insiders say that the compromise has hovered around an approach that would ban payment of yield on any product that looks or acts like insurance on a deposit, but would still let firms structure rewards programs akin to credit-card incentives. However, the lawmakers have been shy about releasing text that could spark further negotiation drama. Crypto investment firm Galaxy is planning to publish a research note this week stating that the odds of the CLARITY being signed into law in 2026 are roughly 50-50, and possibly lower, due to the sheer number of unresolved questions that must be settled in sequence under severe time pressure. A single further blowup among the negotiators could be a fatal delay, though the period after the November elections could offer a final low-odds, last-ditch opening. The so-called 'lame duck' session of Congress at the end of the year can be a period in which the outgoing Congress can still act, and more than one crypto insider has suggested that it's not out of the realm of possibility that a hypothetically derailed Clarity Act could reappear then. While crypto lobbyists are desperate for immediate action on the legislation, the industry is playing the long game on the political front, with crypto PACs devoting millions of dollars to keep adding to the list of its friends in Congress from both parties.