- Key insight: The Senate did not advance the crypto market structure bill, known as the CLARITY Act.
- Forward look: The procedural event has likely stalled the bill until the next Congress.
- What's at stake: For banks, the failure of the vote means that they have another chance to ban stablecoin yield provisions in a future bill, but also means they won't immediately get permissibility wins included in the current bill.
WASHINGTON — A procedural vote on the crypto market structure bill failed 49 to 50.
The vote culminates months of negotiations between Democrats and Republicans on what the future of regulatory treatment of digital assets should look like. The vote is a sweeping defeat for crypto advocates who fought hard to pass the bill in this Congress, sparring with bankers and spending a record-amount of money in the 2024 elections to put lawmakers who would advocate for their interests in powerful positions.
The vote's failure is also a statement on how powerfully negative President Donald Trump's brand — as well as his and his family's ties to crypto — are to Democrats, especially as the party eyes reclaiming both the House and the Senate in the November midterm elections.
Senators had been negotiating a thorny ethics provision, but those talks broke down, Sen. Chuck Schumer, the Senate minority leader, told reporters. Democrats wanted to expand and add stricter enforcement measures to prevent federal officials or their families from profiting off the crypto industry.
Several Republicans joined Democrats in voting against the legislation. Sens. Josh Hawley of Missouri, Susan Collins of Maine and Jerry Moran of Kansas voted nay, as did Sen. Thom Tillis with a motion to recommit — a procedural move.
For banks, the
Moran wrote earlier this month in an
But the defeat of the crypto bill — for this Congress at least — puts at risk a number of measures in the legislation that bankers did want. Specifically, the CLARITY Act expanded bank permissibility around crypto assets, which would let banks participate more in the digital asset ecosystem, and according to some critics,
The defeat follows a press from the White House to lobby against banks' complaints about the yield provisions in the bill. Patrick Witt, who has led the charge for the White House on crypto matters, spent much of the day arguing on social media with bankers about the potential for deposit drain, and the White House earlier released an FAQ on a
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The bill's Democratic negotiators voted against it. Sen. Ruben Gallego, D-Ariz., who led ethics negotiations for Democrats and who's wanted some kind of crypto market structure bill for the short time he's been in Congress, said in a statement after the vote that he wouldn't "support any piece of legislation that enables" Trump's crypto profits.
"The legislation failed squarely because Republicans refuse to say no to the president," Gallego said. "It takes 60 votes to pass a bill, and instead of spending their time twisting themselves in knots to appease President Trump, Republicans should have worked more closely with Senate Democrats to craft a bill that could pass with strong ethics provisions."
The vote most likely ends the push to pursue market structure legislation this Congress. Tillis' vote means that Republicans could bring back the package on the floor, but it would face an even more difficult road, even if that happened with the short legislative calendar.
That means that lawmakers will have to start over again in the next Congress — when Democrats may have control of one or both chambers.
What a crypto market structure bill drafted by Democrats would include is uncertain, but banks might get a more sympathetic ear from them on the question of stablecoin yield than they received in CLARITY. Other provisions, however, could become further out of reach: Sen. Elizabeth Warren, D-Mass., the current ranking member of the Senate Banking Committee, suggested she would oppose some of the measures that benefit banks in the current version.
"The bill would give banks a green light to use Americans' bank deposits to engage in a brand-new list of risky crypto activities: lending against crypto as collateral, buying crypto directly, trading crypto derivatives, operating blockchain nodes, selling crypto software, the list goes on and on," she said. "Think about how the price of crypto shot up and down and up and down in the last couple of years alone, and then imagine what happens when the biggest banks in America use the money in your savings account to load up on that kind of crypto."
