CLARITY Act's 50/50 Senate Shot Hinges on Bank Deal, Ethics

Congress missed the July 4 deadline to pass the CLARITY Act, the crypto market structure bill. Analysts now put its odds of clearing the Senate before an August 7 target at roughly 50/50.

The House passed its version of the bill nearly a year ago. The Senate has struggled to follow. Senator Cynthia Lummis, who chairs the relevant subcommittee, said negotiations have been intense since last Labor Day.

“It’s been, and I argue this process, the major monkey wrench was thrown when the GENIUS Act revision that the banks wanted became a huge issue for us,” Lummis said. She credited Senators Brooks and Tillis for brokering a compromise with the banking industry. Negotiators are still finalizing details around illicit finance provisions and ethics rules, after what she described as thousands of hours of talks.

CFTC Chairman Michael Selig pointed to a different obstacle. Democratic efforts to add language addressing President Trump’s family and its crypto holdings have introduced new friction, he said.

“We’re so close, we have to get this done,” Selig said. He argued that a federal standard is needed to replace the current patchwork of state laws, which he called bad for business. Selig acknowledged the ethics concerns but said they risk derailing broader consensus. “I think there is a little bit of creep into ethics and other issues, and they’re just derailing the real opportunity to have a bipartisan bill in place,” he said.

Without a deal, oversight would default back to regulators rather than a clear statutory framework. Selig said Democrats likely want to avoid that outcome as much as Republicans do.

The August 7 target now stands as the next concrete marker. Whether the Senate can resolve the banking compromise and the ethics language in the next few weeks will determine if the bill moves forward this session.