US Senate advances new crypto law yet CLARITY gridlock might kill the bill for good
On Jan. 29, the Senate Agriculture Committee advanced the crypto market-structure bill, giving the laws referred to as the “CLARITY Act” its first concrete win in the Senate.
The Agriculture panel’s motion strikes the bill nearer to a full Senate battle over which regulator units the guidelines for spot crypto markets.
However, the greater near-term downside is that lawmakers are struggling to resolve an escalating battle over stablecoin “curiosity” and rewards.
This deadlock has already led to gridlock in the banking committee, prompting the White House to intervene.
Agriculture committee strikes ahead on partisan traces
The Senate Agriculture Committee superior the bill on a party-line vote of 12-11, with all Democrats on the committee withholding help, arguing that the draft lacks key guardrails.
Nonetheless, the development sends the bundle to the full Senate whereas signaling that bipartisan help stays a significant impediment.
Under the Agriculture Committee’s framework, the Commodity Futures Trading Commission (CFTC) would achieve authority over spot crypto markets and new rulemaking energy for “digital commodity” exchanges, brokers, and sellers.
This offers the type of “guidelines of the highway” that crypto companies have lengthy demanded to cut back enforcement-by-litigation threat and encourage onshore growth.
Meanwhile, Democratic lawmakers highlighted issues for clearer provisions for decentralized finance and measures to forestall political officers from benefiting from crypto ventures.
Sen. Cory Booker, the committee’s high Democrat, mentioned the bill is shut however not there yet. He described lawmakers as “virtually in the crimson zone” whereas warning that bipartisan enter hasn’t been mirrored in the textual content.
Yet, the bill’s passage instantly drew reactions from high-profile trade figures who view the committee’s motion as a stabilizing pressure, even when the work is unfinished.
Brad Garlinghouse, the CEO of Ripple, described the current legislative push as intense. While acknowledging that the legislative course of might be messy, Garlinghouse confused that readability is preferable to chaos and is crucial for the subsequent technology of builders integrating the know-how into world finance.
Michael Selig, the CFTC Chair, characterized the vote as a success of govt guarantees. He famous that the committee’s motion builds on the President’s pledge to determine the US as the “Crypto Capital of the World” and ensures that the future of economic infrastructure stays an American enterprise.
Coinbase CEO Brian Armstrong additionally weighed in, calling the committee vote a vital step ahead.
Notably, Armstrong singled out Senator Booker for thanks, expressing hope that the Senator would in the end assist steer a complete, bipartisan model of the bill throughout the end line regardless of the present party-line cut up.
From the administration’s perspective, David Sacks, the White House AI and Crypto Czar, framed the vote as a transfer towards establishing a crucial regulatory framework.
Sacks admitted that whereas the vote was partisan, a number of Democrats have signaled a dedication to the laws, and the White House intends to proceed working throughout the aisle to safe their votes.
Banking committee nonetheless stalling CLARITY Act as White House steps in
Even as the Agriculture Committee superior its portion, the companion bill in the Senate Banking Committee has confirmed to be extra contentious and has yet to obtain a committee vote.
That cut up issues as a result of the Banking Committee is the place the most politically explosive query sits: Should crypto companies be allowed to supply curiosity or rewards tied to dollar-pegged stablecoins?
Banks say such incentives might pull deposits from insured establishments. Crypto companies, nonetheless, say proscribing rewards would lock the trade out of fundamental product competitors with financial savings accounts, cash market funds, and fintech yield merchandise.
This dispute has already been powerful enough to delay Senate action, with Coinbase pulling help for the bill.
With the committee process stalling, the White House is getting ready to host a summit on Feb. 2, that includes executives from the banking and crypto industries and a number of commerce teams.
The assembly, hosted by the White House’s crypto council, will give attention to how the bill treats stablecoin curiosity and rewards.
Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, emphasised the geopolitical urgency of those talks. He argued that as the world monetary structure strikes on-chain, the United States can’t afford to cede its management place.
In gentle of this, Witt said that the administration would proceed to interact with Senate Democrats to advance the Banking portion of the bill.
Meanwhile, Arjun Sethi, Kraken CEO, emphasised the want for a cohesive federal framework to resolve the friction. He argued:
“A transparent federal framework brings exercise onshore, makes expectations legible, and allows market infrastructure that may scale. That requires a registration path actual companies can use, and supervision aligned with the place quantity and threat focus. The consequence of modernization is predictable: extra onshore exercise, clearer requirements, and a market construction that rewards transparency and actual competitors moderately than ambiguity.”
This intervention is important as a result of the market is cut up on the future scale of those property. JPMorgan has argued that stablecoin growth projections in the trillions are too optimistic, chopping a previous view and forecasting that the sector will attain about $500 billion by 2028.
Conversely, Standard Chartered expects the stablecoin market cap to succeed in $2 trillion by the finish of 2028.
Essentially, the Senate’s unresolved stablecoin-rewards language is certainly one of the clearest levers that might push outcomes towards one facet of that vary.
What is subsequent for the CLARITY Act on Capitol Hill?
The Agriculture Committee’s passage of the bill is barely the first hurdle, because it nonetheless faces a labyrinth of challenges earlier than it reaches President Trump’s desk.
Under Senate process, as soon as a committee reviews a bill, it’s positioned on the Senate’s Calendar of Business and turns into eligible for flooring consideration. However, eligibility will not be the similar factor as flooring time.
To convey the bill up, Senate leaders sometimes want a movement to proceed, which is often debatable. Because such debates might be extended, leaders typically file cloture motions to finish them. For most issues, which means a three-fifths threshold (successfully 60 votes) in a full Senate.
That math is why Agriculture’s party-line advance is a milestone however not a breakthrough. To attain the president’s desk, the bill would wish help from not less than seven Democrats in the full Senate.
Chris Dixon, managing Partner at Andreessen Horowitz, acknowledged the problem however pointed to the inevitability of the course of. He famous that whereas the vote lacked bipartisanship this time, the momentum is simple.
Meanwhile, if a Senate model passes, lawmakers would nonetheless have to reconcile it with the House’s model handed in July 2025. This units up a conference-style negotiation or “ping-pong” amendments, one other part the place stablecoin rewards and different delicate provisions might be rewritten.
However, the course of might be a lot simpler at this stage, as House management has expressed a willingness to cooperate. House Committee on Agriculture Chairman Glenn “GT” Thompson said:
“After members of the Senate Banking Committee advance their laws in the coming weeks, the House and Senate should work collectively to meld every of those packages right into a ultimate settlement that can unlock American innovation and improvement in the digital asset ecosystem.”
Despite the procedural labyrinth, market optimism persists. Data from the crypto betting platform Polymarket point out a 61% chance the bill will move earlier than the finish of the yr.
Matt Hougan, Bitwise CIO, outlined the binary nature of the market’s response to those subsequent steps. He prompt that if the “Clarity Act” passes in a type the trade accepts, the market will doubtless rally sharply as traders value in assured development for tokenization.
However, if the laws fails, Hougan warned that the market would enter a “wait and see” part. In that state of affairs, value appreciation would rely upon demonstrating real-world adoption moderately than regulatory optimism.
The submit US Senate advances new crypto law yet CLARITY gridlock might kill the bill for good appeared first on CryptoSlate.
