Crypto's Clarity Act Still Has a Chance to Pass Despite Tight Senate Schedule

Although April is likely a lost month for the crypto Clarity Act, a U.S. Senate committee hearing in May could keep the critical market structure legislation on track, provided it reaches a final Senate vote by July, according to lawmakers and lobbyists. The legislative calendar is rapidly filling up, but a brief delay may not necessarily derail the bill's progress. Earlier negotiations over decentralized finance protections have been largely settled, leaving few obstacles in the way of committee approval. However, the banking sector's concerns about stablecoin rewards pose a significant challenge. The Senate Banking Committee hearing is only the first step in a lengthy process, with the Senate set to recess in August and focus on election mode until the November midterms. If the bill clears the Senate Banking Committee, it will need to be merged with the version passed by the Senate Agriculture Committee, and lawmakers will need to finalize an ethics piece. The House would then need to approve the revised bill, which could happen quickly if disagreements are minimal. The final step, President Trump's signature, is expected to be the easiest, although he has introduced uncertainty by stating he won't sign any bill until voter citizenship legislation is approved. The Digital Asset Market Clarity Act, if passed, would become the second major crypto bill to become law, following last year's Guiding and Establishing National Innovation for U.S. Stablecoins Act. However, an unresolved stablecoin issue from the GENIUS Act has delayed progress on the Clarity Act, with bank lobbyists expressing concerns that stablecoin rewards programs could jeopardize their business model. The debate has sparked intense rhetoric from crypto insiders, with Coinbase's Chief Legal Officer Paul Grewal advocating for the importance of rewards programs. Key Senate negotiators have expressed hopes for a compromise, but the White House has leaned into the crypto position, allowing some rewards that don't resemble interest on core bank deposits. Insiders say the compromise has centered around banning yield on products that resemble insurance on deposits, while permitting firms like Coinbase to structure rewards programs akin to credit-card incentives. The odds of the Clarity Act's success are roughly 50-50, according to a research note from crypto investment firm Galaxy, with the uncertainty stemming from the numerous unresolved questions that must be settled under severe time pressure. A single further disagreement among negotiators could lead to a fatal delay, although the post-November election period may offer a final opportunity for the bill to pass. Crypto lobbyists are pushing for immediate action, while the industry plays the long game on the political front, with crypto PACs investing millions in supporting congressional friends from both parties.