Senate Banking Committee Passes CLARITY Act in 15-9 Vote

The United States Senate Banking Committee is holding a major markup session on May 14 for the Digital Asset Market Clarity Act, which is mainly known as the CLARITY Act. In this markup session, the Senate has approved a major bill with a 15-9 bipartisan vote. 

What is the CLARITY Act?

The CLARITY Act is expected to bring regulatory clarity with clear federal rules for the digital asset sector by dividing the authorities between two agencies. While the Commodity Futures Trading Commission would watch over many cryptocurrencies as digital commodities, including Bitcoin and Ethereum, the Securities and Exchange Commission (SEC) will focus on tokens that fall under the securities category.

The bill also includes provisions for stablecoins, along with protections for DeFi developers. Most importantly, this bill is expected to bring new reforms to the crypto market. This bill ends long-standing regulatory uncertainty present in the crypto market that has harassed the digital asset sector.

In 2025, the House approved the version of the bill with strong bipartisan support. However, in the Senate, the bill has been stuck in the Banking Committee for around a year. Today’s markup session is the first formal committee vote. In this markup session, senators have voted on the bill along with 100 different amendments. Senator Elizabeth Warren has proposed more than 100 amendments to this bill.

After the bill is approved in this markup session in the committee that includes 13 Republicans and 11 Democrats, in the next step, it will move toward a full Senate floor vote. After that session, lawmakers would need to work on the differences between the Senate version and other versions, such as the Agriculture Committee’s different version. After this process, the bill will land on U.S. President Donald Trump’s desk for final approval with his signature. According to some reports, the bill is likely to pass by July.

The committee is led by Republicans under Chairman Tim Scott, who is a Republican from South Carolina.

The bill is also getting strong support from the crypto sector, after major compromises were made, which were missing in the earlier session.

Issues Between Banks and Crypto Firms Over Stablecoin Yield; Largely Resolved

One of the major points of disagreement was stablecoin yields. There was a tussle on whether crypto companies could pay yield on stablecoins such as USDC or USDT. 

The banking sector has raised questions that this yield might drain deposits away from traditional bank accounts and affect their operations. In response, the crypto sector stated that yield is linked to user activity, and it is different from bank interest.

Senators Thom Tillis and Angela Alsobrooks have made compromises on this tussle. This compromise was included in the latest 309-page bill draft that was introduced on May 12. 

The draft mentioned the provision that includes a ban on passive yield, which looks like a bank interest on stablecoin holdings. However, it will allow yields based on activities that are linked to things like transactions or use of the platform. With such compromises, senators are resolving concerns of banks as well as the crypto sector while encouraging innovation at the same time.  

Senator Tim Scott stated in the post on X that, “Families, small businesses, investors, and innovators deserve clear rules of the road for digital assets. The Senate’s version of the CLARITY Act delivers certainty, safeguards, and accountability, while protecting Main Street, strengthening national security, and keeping innovation in America.”

Despite some groups of banks, such as the American Bankers Association, that are still opposing this bill. These banking groups have slammed the compromises by saying that they are not strict enough to regulate the digital asset sector.

However, the White House Council of Economic Advisers has mentioned that the impact of stablecoin yield on bank lending will be limited.

After new changes in the CLARITY bill draft, Coinbase CEO Brian Armstrong raised his support for the bill. During the January markup session, he raised objections over the previous versions of the bill.

The markup session in the crypto sector has sparked discussion in the crypto community. Coinbase CEO Brian Armstrong recently stated that not everyone got everything they wanted, but it is important to approve the regulatory framework. 

Senator Cynthia Lummis mentioned the importance of the CLARITY Act, saying that “Without the Clarity Act, the digital asset industry will move offshore to any nation that has regulators willing to engage. Every day that we stall is a day we hand our competitors an advantage we won’t get back. The Clarity Act is critical to securing our financial future.”

Bitcoin Shot Up by 3% Following Senate Approval

While the crypto market is already up due to positive sentiment in the last few days, this markup session for the CLARITY Act might trigger upward momentum if institutional investors start to accumulate news.

In the last two days, on May 12 and May 13, Bitcoin ETFs have witnessed outflows of around $233 million and $630 million, according to Farside. These outflows in ETFs have also dropped Bitcoin (BTC)’s price below $80,000.

However, the crypto market is already giving positive results after the committee decided to advance the CLARITY Act. According to CoinMarketCap, Bitcoin is trading at around $81,917.18 with a 3.17% spike in the last 24 hours. The overall market capitalization of the crypto market also soared by around 2% and currently holds around $2.72 trillion. The upward trend in Bitcoin has also triggered correlation with other altcoins such as Ethereum, XRP, and others.