Long-awaited vote on crypto market structure legislation is set for the Senate on Tuesday, but it remains unclear whether the measure known as the Clarity Act has enough votes to pass as last-minute lobbying by banks and the cryptocurrency industry intensifies.
The Clarity Act, which would establish a new regulatory structure for cryptocurrencies and other digital assets, has languished in the Senate for months. The bill cleared the Senate Banking Committee in May, but has stalled as Senate leaders have struggled to wrangle the 60 votes needed for approval from the chamber. With full attendance, at least seven Democrats would need to support the measure to escape the filibuster.
A myriad of issues have slowed the process and could put the vote in jeopardy. Banks warn they cannot support the bill unless it includes a fix to stop interest-like payments on stablecoin, which they say could cause deposit flight. And Democrats, only two of whom voted to advance the bill out of committee, have said they cannot support the bill unless it includes stronger ethics language to prevent officials like President Donald Trump and his family from profiting from crypto ventures.
The preliminary vote on Tuesday is a put-up-or-shut-up moment for the crypto bill, which Senate Majority Leader John Thune, R-S.D., scheduled just before senators left for their August recess. Supporters are hopeful they can scrape enough support to keep the bill alive.
"Over the past year, this bipartisan process has given everyone at the table a real chance to shape the Clarity Act, and the legislation genuinely reflects the priorities of both sides of the aisle," Sen. Cynthia Lummis, R-Wyo., one of the leaders of the bill, said after releasing updated text Thursday to try to garner support. "It's a good bill, and it's time for it to become law."
Many Democrats oppose the bill, largely because of the lack of ethics language they say must address Trump and his family's profiting off of crypto ventures.
"I can assure you that I'm not hearing from my constituents that their number one concern is to pass the Clarity Act," Sen. Chris Van Hollen, D-Md., said in a Sunday video on X. "This is a bill that is masquerading as a way to create good regulation and protection for consumers with respect to cryptocurrency, but it has some big problems that have not been fixed."
Van Hollen said in his post that "We can't let this pass."
Still, the Clarity Act appears to be a jump ball at this point.
Republican leaders on the bill released an update to the measure late Sunday that they say reflects their final offer to meet Democratic demands for the bill. The updated bill includes what the Republicans say represents large parts of a crypto ethics agreement brokered by Sens. Thom Tillis, R-N.C., and Ruben Gallego, D-Ariz., that Trump has now agreed to. That includes a key Democratic ask to allow state attorneys general to enforce ethics requirements on federal officials.
The bill now also includes a compromise on stablecoin yield aimed at appeasing banking interests by directing the Treasury secretary to restrict rewards if deposit flight from community banks occurs on a substantial scale.
A Democratic aide familiar with the negotiations said when it comes time for the preliminary vote, enough Democrats may support keeping the bill alive. The aide, speaking on condition of anonymity to discuss private negotiations, said Thune has pitched the vote as a "free vote," meaning that the vote is merely to keep the bill moving and the measure will be amended and voted on again before final passage to address lingering concerns.
Sen. Bernie Moreno, R-Ohio, one of the leaders of the bill who was financially backed by crypto interests during his 2024 campaign to oust former Sen. Sherrod Brown, D-Ohio, tried to remind senators on Sunday that Tuesday is not the final vote.
"This is not a vote on final passage. It is a vote to end debate on whether the United States Senate should even consider a bill to regulate digital assets," Moreno said in an X post. "If Senators have concerns about the bill, they can offer an amendment after we agree to take it up."
The White House has also teased further concessions on ethics language and other issues, but only if the Senate clears the preliminary vote, the Democratic aide said. That promise could act as an additional sweetener to entice crypto-curious Democrats to vote to advance the bill to see what the White House will offer.
"The President has been unequivocal: Congress must pass the CLARITY Act so we can stay ahead of foreign competitors and lead the world in innovation," the White House press office said in an emailed statement, without answering CNBC's questions about its concessions on Clarity Act ethics language. "The Trump Administration has worked tirelessly with Congress on the CLARITY Act and has already agreed to the most comprehensive and wide-ranging ethics provision in history."
Crypto interests are bullish about the bill's prospects. Coinbase CEO Brian Armstrong, whose company has been out front about supporting the bill, said on CNBC Thursday that the legislation is ready to be supported by the Senate.
Armstrong also said regulation will be coming for crypto regardless of the vote tally.
"Frankly, if it doesn't pass, it's also going to be a good outcome because the SEC and the CFTC have said that they're ready to publish rulemaking, and we're going to get regulatory clarity one way or another on the 15th or the day or two after," he said, referring to the Securities and Exchange Commission and Commodity Futures Trading Commission.
Coinbase also struck an agreement with financial services provider Moov last week to grant community banks access to stablecoin capabilities, a move likely intended to ease community bank fears of being bigfooted by the Clarity Act. CNBC was first to report the agreement.
Banks, including the Independent Community Bankers of America, the trade association for community banks, have led opposition to the Clarity Act, including the latest version, over concerns about stablecoin yields.
While the bill could technically be brought back in an amended form if the preliminary vote Tuesday fails, it's unclear whether lawmakers have enough time to amend the package and get it across the finish line before the end of this Congress should Tuesday's vote fail.
And the bill's current opposition doesn't seem to be going away.
In a Thursday letter to Thune and Senate Minority Leader Chuck Schumer, D-N.Y., the American Bankers Association led nearly 80 other banking groups urging the Senate to strengthen the bill's stablecoin provisions. Some Republicans in the Senate have also expressed unease with the Clarity Act over the concerns of bankers.
The bill's "prohibition on stablecoin payment of interest, yield and rewards must be strengthened to preserve community financial institution deposits and local lending to small businesses, farmers, and families," the groups said.
The updated bill text does not appear to resolve all of the bankers' issues with the bill.
In a statement to CNBC, Brooke Ybarra, senior vice president for innovation and strategy at ABA, said "bankers across the country have had the chance to speak with their senators about the importance of preserving the deposits that support local lending."
Ybarra also sounded optimistic that senators will oppose the bill when it comes to the floor.
"We appreciate the growing number of lawmakers who share our concerns with the current interest loophole in the bill and recognize that targeted changes to the Clarity Act can strengthen the legislation and improve its chances of clearing the full Senate," Ybarra said. "We remain optimistic that the Senate will ultimately consider an improved Clarity Act that embraces innovation without undermining the economy."