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Senate Committees Advance Competing Versions of Crypto Market Structure Bill Amid Disputes Over Stablecoin Yields and Ethics Provisions

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Digital Asset Market Clarity Act Advances, But Faces Major Hurdles

The U.S. Senate is advancing a major piece of legislation, the Digital Asset Market Clarity Act (CLARITY Act), which aims to establish a federal regulatory framework for the cryptocurrency industry. The bill has progressed through the Senate Agriculture Committee but faces significant hurdles, including a stalled markup in the Senate Banking Committee and disputes over stablecoin yields, decentralized finance (DeFi) liability, and ethics provisions for government officials.

Legislative Progress and Status

Senate Agriculture Committee

The Senate Agriculture Committee voted on Thursday to advance its version of the bill. The vote was 12-11 along party lines, with all Republican members supporting the measure and all Democrats opposed. Committee Chairman John Boozman stated that "significant progress had been made" and that it was time to advance the process. Ranking Democrat Amy Klobuchar indicated that while progress was good, more work was needed.

Senate Banking Committee

The Senate Banking Committee, under Chairman Tim Scott, had scheduled a markup session for its version of the bill. This session was canceled following a public statement from Coinbase CEO Brian Armstrong withdrawing the company's support for the draft. The Banking Committee's version includes provisions on stablecoin yield and legal protections for decentralized finance (DeFi) developers.

Requirements for Enactment

To become law, the bill must:

  • Clear the Senate Banking Committee
  • Have its distinct versions from both committees combined into a single bill
  • Be approved by a final vote in the Senate
  • Be approved by the House of Representatives (which passed its own version in July)
  • Be signed into law by the President

"No bill than a bad bill." — Coinbase CEO Brian Armstrong, explaining the company's withdrawal of support.

Key Provisions of the Bill

Token Classification

The draft bill proposes a "non-ancillary" legal status for certain crypto assets. Tokens included in a listed exchange-traded product (ETP) as of January 1, 2026, would be classified as non-ancillary assets and exempted from SEC disclosure requirements. Based on current ETP listings, this could apply to XRP, Solana, Litecoin, Hedera, Dogecoin, and Chainlink.

Regulatory Roles

The bill seeks to clarify the regulatory jurisdictions of the SEC and CFTC regarding cryptocurrencies, and to establish registration and compliance standards for crypto brokerages, exchanges, and other entities.

Stablecoin Yields

A major point of negotiation involves whether stablecoin issuers can offer rewards, interest, or yields to holders. The Banking Committee's version restricts such payments to amounts equivalent to interest on bank deposits. The American Bankers Association's Community Bankers Council urged Senate members to prevent stablecoin issuer affiliates from offering such rewards.

Decentralized Finance (DeFi) Liability

The bill includes the Blockchain Regulatory Certainty Act, which protects DeFi software developers who do not control or custody customer funds from being treated as money transmitters. DeFi advocates seek assurances that obligations are placed on individuals rather than code, and provisions enabling individuals to self-custody their crypto assets.

Ethics Provisions for Government Officials

Democratic members, including Senators Elizabeth Warren and Cory Booker, advocated for provisions preventing public officials from profiting from digital asset ventures while in office. Senator Booker cited potential financial gains by the President and his family from the industry. An amendment to introduce such an ethics provision was introduced during the Agriculture Committee hearing but failed along party lines. The Banking Committee's version reportedly lacks this provision.

"This bill puts investors, our national security and our entire financial system at risk." — Senator Elizabeth Warren

Industry and Political Reactions

Supporters

  • Chairman Tim Scott stated the bill "reflects serious, good-faith work across the committee and delivers the certainty, safeguards, and accountability Americans deserve."
  • The Blockchain Association and Digital Chamber trade groups expressed support for the legislative effort.
  • Industry firms including Kraken, a16z, Ripple, and White House advisor David Sacks reaffirmed support for the bill and urged resolution of outstanding concerns.

Opponents and Critics

  • Senator Elizabeth Warren argued the bill "puts investors, our national security and our entire financial system at risk."
  • Senator Cory Booker criticized the absence of ethics provisions.
  • The watchdog group Public Citizen labeled the bill the "gryfto" bill.

Coinbase Withdrawal of Support

Coinbase CEO Brian Armstrong stated the company withdrew support, indicating a preference for "no bill than a bad bill." Armstrong attributed issues to lobbying from traditional banks and cited specific objections regarding the ability for crypto owners to earn interest on stablecoins.

Political and Industry Context

President Trump previously urged Congress to pass two crypto bills. A bill establishing guardrails for dollar-backed stablecoins passed in July. The current legislative window is narrowing due to ongoing Senate debates over federal funding and the approaching 2026 midterm elections.

The crypto industry has amassed significant financial resources for political engagement, with the Fairshake network of Super PACs announcing $193 million cash on hand for the 2026 midterms, including contributions from Coinbase, Ripple, and Andreessen Horowitz.

The White House reportedly plans a meeting to seek common ground among various stakeholders. The timeline for final passage remains uncertain, with conflicting projections ranging from a July 4 deadline to completion by early August.