At some point, progress on the crypto industry’s top policy priority – the Digital Asset Market Clarity Act – becomes an insurmountable math problem, with too little time in the US Senate’s work schedule to allow for its passage. But the bill has now been formally proposed in the Senate, and industry lobbyists are still aiming for a last-minute victory.
There are about eight weeks of floor time left in the Senate before lawmakers disperse for summer recess and the political demands of the midterm congressional elections. And as the election period becomes increasingly urgent, the appetite for legislative cooperation could also suffer.
During this brief window of work in the upper house of Congress, the Clarity Act is expected to go through several procedural steps that can only begin once the Market Structure bill is finalized — a goal that still requires resolving big differences between the political parties and the White House.
The Clarity Act would establish a tailored regulatory regime for crypto in the United States – an idea that has significant bipartisan support. But even if the bill were ready to go, a wide range of items related to Senate business are competing for time and attention. And some of them don’t turn out very well.
A deadline is approaching this month to extend the Foreign Intelligence Surveillance Act (FISA), and reaching a long-term agreement on US spying powers has been a challenge, particularly around inserting a ban on central bank digital currencies (CBDCs). Senate leaders had warned that the CBDC component could undo that chamber’s efforts, and an impasse has developed between the House of Representatives and the Senate that is still being resolved, but the latest version of the bill would include a temporary ban that ends in three years.
However, more fireworks erupted during the approval process for an immigration control funding bill. The spending plan was derailed by an internal outcry from Republicans opposed to President Donald Trump’s Justice Department’s $1.8 billion “anti-arms” fund to compensate allies. A court ordered the project halted during the dispute over its legality, and Acting Attorney General Todd Blanche reportedly bowed to pressure Tuesday to assure lawmakers the idea is dead, which should clear the way for the immigration bill.
Unmissable bills
These two bills – FISA and immigration – must pass to keep certain aspects of the federal government functioning, prioritizing them over other work. Crypto lobbyists express confidence that these issues will soon be resolved.
But once approved, that doesn’t necessarily mean the crypto bill will go smoothly, which was officially moved to the Senate calendar this week.
Adding some potential drama is President Trump’s insistence that one of the legislative efforts — FISA or a bill overhauling U.S. housing regulations — be coupled with his efforts to impose voter ID and proof of citizenship in elections ahead of the midterm congressional elections, which he says will lead to his impeachment if Democrats win. Adding this controversial bill on top of another would significantly reduce the host bill’s chances of passage, but Trump has already threatened to halt congressional progress on other issues if lawmakers fail to do so.
The housing bill he’s considering could be one of the Clarity Act’s biggest competitors for floor time. Bipartisan legislation to encourage U.S. housing construction (while restricting certain institutional investors) has been heavily lobbied by both the House and Senate, but leaders in both chambers are reportedly working on a version that would satisfy both. Even if everything goes well, the Senate schedule is a zero-sum proposition at this point, meaning that every hour spent on anything short of Clarity reduces the chances that the chamber will have enough bandwidth for the bill.
The Senate is also locked in debate over a war powers resolution aimed at ending U.S. military action in Iran. And the coming days should also see action on legislation known as the farm bill that could be heard by the Senate Agriculture Committee that is also expected to work on a final version of the Clarity Act, as well as potential progress on the National Defense Authorization Act for next year.
Summer projects
Although White House officials have expressed the Independence Day goal that the Clarity Act clears Congress early next month, various lawmakers have suggested a date of late July or even early August — the last week before the long Congressional recess begins.
“Under my leadership, we will codify a future-proof digital asset market structure that cannot be undone by crypto haters,” the president wrote in a recent post on his social media site. “The new frontier of finance is being built in America, and ‘TRUMP’ will NEVER let Crypto down!”
His codification promise may depend on what Trump is willing to allow in the Clarity Act, involving an ethics provision aimed squarely at him: banning government officials from personally participating in the crypto industry. A bill without such limits is widely seen as a compromise for Senate Democrats, but crypto insiders suggest a trail period has been extended that may not force Trump to divest from his own interests.
The Clarity Act was recently approved by the Senate Banking Committee in a narrow bipartisan vote that drew great fanfare from the industry. But the party’s approval of a parallel version in the Senate Agriculture Committee is now being challenged on some issues to win over Democrats on that committee, including the potential requirement that the Commodity Futures Trading Commission — one of the main regulators of crypto activity — obtain nominations from the White House to fill its four vacant commissioner positions (two Republicans and two Democrats).
Ongoing battles
Banking industry lobbyists are also expected to continue attacking the bill, which includes a section on the stable yield of coins that bankers see as a threat to their deposit base. And decentralized finance (DeFi) interests are still trying to gain greater legal protection for developers who don’t want to be punished for illicit use of their work.
So the bill isn’t finished, and crypto advocates in Washington say it didn’t get off to a particularly fast start in June. Once the legislation is completed, including combining versions of the banking and agriculture panels and adding an ethics provision, Senate leaders will need to set a certain amount of speaking time — potentially a full week (one of eight precious eight remaining before the August recess).
Otherwise, there’s some time left in September, and then comes the biggest wild card on the congressional calendar: the so-called “lame duck” session in which members of this Congress will continue to work for about four weeks after the election effectively fires some of the lawmakers and others retire. Desperate deals have been made on major bills during these sessions, but the chances are slim.
Sen. Cynthia Lummis, who chairs the Digital Assets Subcommittee of the Senate Banking Panel, has issued a steady stream of encouragement for the Clarity Act.
“We are closer than ever to a functioning digital asset market structure,” Lummis said Tuesday on the social media site X. “Now is not the time to flinch.”
Read more: Clarity Act clears U.S. Senate committee, heading toward final test in Congress
