Will the Democrats Finally Support the Cryptocurrency Bill?

The CLARITY Act has undergone another round of changes as Senate Republicans attempt to secure enough Democratic support for a procedural vote on Tuesday regarding the Cryptocurrency Market Structure Act.

The latest version, consisting of 635 pages, includes an ethical framework supported by President Donald Trump, which would limit public officials from issuing or sponsoring digital assets. The revised text also allows the Department of Justice (DOJ) and state attorneys general to enforce the rules.

Last-Minute Changes

The change pertains to one of the main issues raised by Democrats during negotiations. Previously, they opposed an agreement that would make the Department of Justice responsible for enforcing ethical provisions. The discussion on the rules also stemmed from concerns about the financial involvement of Trump and his family in the crypto sector.

– After a year of intense daily bipartisan negotiations, this bill is ready. President Trump voluntarily agreed to unprecedented ethical restrictions, subjecting every federally elected official, judge, and their spouses to some of the strictest ethical limitations in U.S. history. Democrats got what they wanted; now they must accept that in response – stated Cynthia Lummis, Chair of the U.S. Senate Subcommittee on Digital Assets.

The ethics section includes a significant portion of the Tillis-Gallego proposal. Among the provisions, officials would have to either sell significant financial assets related to cryptocurrencies or transfer them to a blind trust.

Changes to the Blockchain Regulatory Safety Act (BRCA) now limit its scope to the Bank Secrecy Act and civil enforcement. An amendment that would have expanded its protection to criminal proceedings, including cases initiated under Section 1960, has been removed. The changes would also subject miners and validators to that protection.

Other Key Details

The section of the bill regarding stablecoin yield has also been revised with a ‘circuit breaker’ mechanism that Tillis first introduced in July. This would give federal regulators the ability to intervene if stablecoins cause significant withdrawals from local commercial banks.

Stricter vertical integration limits have also been introduced, such as rules covering affiliated trading and potential conflicts involving digital exchanges, brokers, and traders. The text also confirms that state consumer protection laws remain in effect. Developer protections will not override derivative regulations nor change the rules governing predictive markets.

Last week, Coinbase CEO Brian Armstrong expressed support for the CLARITY Act ahead of the Senate vote. Speaking on CNBC’s Squawk Box Asia on September 10, the director stated that the bill is ready for approval and called for support from legislative groups, banks, and crypto companies. He also mentioned that Coinbase’s main concerns regarding the bill have been addressed after the company previously raised several issues it deemed significant.