The U.S. Senate Banking Committee is set to consider proposed amendments to the Digital Asset Market Clarity Act this week. While dozens of suggestions will be reviewed, most are unlikely to be approved. The draft law has already sparked heated debate among lawmakers, especially over public ethics, legal protections for software developers, and provisions specific to the decentralized finance (DeFi) sector.
Intense Senate deliberations
Most of the proposed amendments are sponsored by Democratic Senators Elizabeth Warren and Jack Reed. However, the committee’s Republican majority appears resistant to major changes. Each amendment will be discussed individually, accepted or rejected by vote unless withdrawn, and the committee will eventually hold a full vote on the draft legislation before moving it forward.
Democrat Jack Reed from Rhode Island has put forward proposals that directly address banking sector concerns by imposing new restrictions on stablecoin returns. Reed also advocates completely removing the Blockchain Regulatory Certainty Act section, which exempts developers without direct access to funds from regulation.
In a similar vein, Nevada Senator Catherine Cortez-Masto has suggested a safe harbor that would shield software developers from criminal liability if they do not register under money transfer laws. Meanwhile, Maryland’s Chris Van Hollen has submitted eight separate amendments that would prohibit U.S. presidents and high-level officials from owning, promoting, or connecting with digital asset firms.
Conflict of interest and ethics issues
One of Elizabeth Warren’s most notable amendments targets bank applications by the president and affiliated companies, aiming to curb political corruption and presidential-level bank ownership. Warren is also pushing to strip significant digital commodity oversight provisions from the current text. Another of her proposals seeks to cap credit card interest rates and make bank supervisory documents public.
Virginia’s Mark Warner plays a prominent role in the debates over illicit financing through DeFi. Warner is advocating for a control mechanism to clarify when non-centralized trading protocols would be subjected to anti-money laundering rules under the Bank Secrecy Act.
CBDCs and next steps
Republican Senator Bill Hagerty has introduced a clause to ban central bank digital currencies (CBDCs) issued by the Federal Reserve. Discussions about CBDC restrictions have surfaced in Congress in previous sessions as well.
Reports suggest that this week’s hearing has already been strategically planned by Republicans to determine which amendments will be incorporated. While past sessions saw hundreds of proposed changes and lengthy delays, recent months of negotiations have resolved key disputes. If approved by the committee, the bill may be merged with a similar draft passed by the Senate Agriculture Committee.
For the Clarity Act to pass the full Senate, Democratic demands regarding conflict of interest and ethics regulations must be addressed. An agreement has yet to be reached on provisions regulating ties between the president’s circle and cryptocurrency firms. Several senators, including Democrat Kirsten Gillibrand, have stated that without these requirements, the bill cannot proceed in the Senate.
Supporters of the Clarity Act recognize that at least 60 Senate votes are needed for passage. Once through the Senate, the bill will return to the House of Representatives for another vote. The House approved a similar bill last year.
Coinbase CEO Brian Armstrong highlighted on X Wednesday that the law could provide Americans with faster, cheaper, and easier access to the financial system.
