Ahead of a key Senate Banking Committee debate on 14 May, the latest version of the CLARITY Act is drawing sharply divided reactions as lawmakers expand anti-money laundering provisions, tighten oversight of digital asset intermediaries and reopen political debate around Donald Trump’s growing crypto interests.
For years, Washington’s debate around crypto regulation revolved around a relatively simple question: should digital assets be treated like traditional finance at all?
Ahead of the Senate Banking Committee’s 14 May markup session on the CLARITY Act, the latest 309-page draft suggests lawmakers may now be asking something different entirely: how closely should crypto markets resemble the regulatory framework banks and capital markets already operate under?
Released on 12 May, the Senate Banking Committee’s revised markup of the CLARITY Act builds on previous market structure proposals by establishing clearer jurisdictional boundaries between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). But the updated draft also places significantly greater emphasis on anti-money laundering (AML), sanctions compliance, investor disclosures and intermediary oversight than earlier iterations.
This shift is already shaping reactions ahead of Thursday’s debate.
Supporters have framed the bill as the clearest signal yet that the US intends to formalise digital asset markets inside its financial system. Critics, meanwhile, argue the legislation still fails to address political conflicts tied to President Donald Trump’s growing involvement in the crypto sector.
A tougher regulatory tone emerges
One of the clearest differences in the latest CLARITY Act markup is the extent to which the Senate Banking Committee is presenting the bill as a financial crime and consumer protection framework, rather than solely a market innovation initiative.
Committee materials released alongside the draft repeatedly stress fraud prevention, sanctions enforcement, cybersecurity and investor safeguards. The updated proposal would apply Bank Secrecy Act (BSA) obligations to digital asset brokers, dealers and exchanges, requiring anti-money laundering and counter-terrorist financing programmes, suspicious activity monitoring and customer identification procedures.
The CLARITY Act also introduces a new “Special Measure 6” authority, enabling the Treasury Department to act against foreign jurisdictions or institutions deemed to pose primary money laundering concerns involving digital assets.
Elsewhere, lawmakers included provisions around:
- digital asset kiosk registration requirements;
- intermediary risk-management standards;
- cybersecurity studies;
- sanctions obligations linked to decentralised finance (DeFi);
- and increased funding authorisation for the Financial Crimes Enforcement Network (FinCEN).
That broader compliance focus marks a noticeable evolution from earlier House-led versions of crypto market structure legislation, which largely centred on jurisdictional clarity and innovation policy.
The latest Senate materials instead frame the status quo itself as the systemic risk. “The real risk is the status quo,” one Senate Banking Committee fact sheet stated, arguing the bill would help prevent another “FTX-style collapse” through disclosure requirements and safeguards against insider misconduct.
DeFi and self-custody remain central fault lines
The revised CLARITY Act draft also attempts to strike a balance between enforcement powers and protections for decentralised software development.
Committee Republicans pushed back strongly against claims the bill would criminalise developers or ban self-custody wallets, stating the legislation “explicitly protects software developers who publish, maintain, or contribute to code without controlling customer funds”.
At the same time, the CLARITY Act bill introduces risk-management obligations for centralised intermediaries interacting with DeFi protocols and clarifies sanctions compliance expectations for those platforms. This distinction appears designed to reassure both crypto developers and regulators concerned about illicit finance risks tied to decentralised protocols.
The committee’s “Myth vs. Fact” briefing repeatedly argues the legislation targets misconduct rather than software development itself, summarising the approach with the line: “Code is protected — misconduct is not.”
The revised draft also includes stronger resale restrictions and disclosure requirements designed to address insider trading and market manipulation concerns.
Stablecoin yield battle still hangs over the markup
While the latest CLARITY Act markup expands significantly on AML, disclosure and intermediary oversight, one of the more contentious issues surrounding the broader digital asset debate remains unresolved: stablecoin yield.
The question of whether crypto firms should be allowed to offer yield-bearing products tied to stablecoins has become one of the clearest fault lines between the banking sector and the digital asset industry in Washington.
Traditional banking groups have increasingly argued that yield-bearing stablecoin products risk creating a parallel deposit system outside conventional prudential oversight, particularly if consumers begin treating tokenised dollar products as alternatives to bank accounts.
Crypto advocates, meanwhile, have positioned stablecoin-linked yield as one of the sector’s key advantages over traditional financial infrastructure, particularly in decentralised finance markets where token holders can earn returns through lending or liquidity provision mechanisms.
Although the latest markup does not directly resolve the issue, the broader Senate Banking Committee language around anti-money laundering, intermediary oversight and risk-management standards suggests lawmakers are attempting to bring larger parts of the stablecoin ecosystem closer to traditional financial compliance frameworks.
This tension has become increasingly important as Congress simultaneously advances separate stablecoin legislation through the GENIUS Act. Together, the two bills are beginning to form the foundations of a broader US digital asset framework, one that increasingly blurs the line between crypto-native financial products and more traditional forms of regulated financial infrastructure.
Warren shifts debate toward Trump-linked conflicts
While much of the crypto industry’s lobbying effort around market structure legislation has focused on regulatory certainty, opponents are increasingly framing the debate through a political lens.
Ahead of Thursday’s markup, Senator Elizabeth Warren, Ranking Member of the Senate Banking Committee, issued one of the strongest criticisms yet of the revised proposal.
“This bill puts investors, our national security and our entire financial system at risk – and it will turbocharge Donald Trump’s crypto corruption,” Warren said. “In just one year in office, the President and his family have raked in at least $1.4 billion in gains from crypto deals alone, and yet this bill stunningly includes zero provisions to prevent that.”
Warren added: “No Member of the Committee should support a bill that fails to stop the massive conflict of interests posed by Donald Trump and his family’s crypto ventures.”
The comments reflect how the political debate around crypto regulation has evolved over the past year. Following the collapse of FTX in 2022, criticism of digital assets in Washington largely centred on consumer harm and investor protection. Increasingly, however, Democratic opposition has also focused on political influence, conflicts of interest and the relationship between elected officials and digital asset businesses.
Crypto advocates see institutional validation
Supporters of the revised CLARITY Act draft, however, have framed the markup as a turning point for institutional adoption of digital assets within the US financial system.
Michael Saylor, Executive Chairman of Strategy, described the markup as a catalyst for “the next wave of Digital Capital, Digital Credit, and Digital Equity in the U.S. and globally”.
Saylor added the legislation would provide “institutional validation” for Bitcoin and broader digital asset markets.
Senator Cynthia Lummis, one of Congress’ most prominent crypto advocates, also framed the markup as part of a broader push to establish the US as the leading jurisdiction for digital asset innovation.
“Big week for digital assets,” Lummis wrote on social media. “After nearly a year of bipartisan work, this markup brings us one step closer to cementing America’s place as the global leader in financial innovation.”
“Wyoming showed the way, now Washington is following.”
The comments underline how Republican lawmakers increasingly view digital asset legislation not only through a regulatory lens, but also as part of broader economic competitiveness policy.
From innovation bill to financial infrastructure legislation
Despite the political divide surrounding the latest CLARITY Act markup, the revised draft points toward a wider change in how Washington appears to be approaching crypto regulation.
Compared to earlier FIT21-era proposals, the Senate Banking Committee’s messaging places far greater emphasis on:
- enforcement powers;
- AML compliance;
- sanctions monitoring;
- investor education;
- disclosure frameworks;
- and systemic oversight.
Even the committee’s own supporting documents spend considerable time defending the bill against accusations of regulatory weakness. This change in tone may ultimately prove more significant than any individual provision.
Rather than treating digital assets as an entirely separate category requiring bespoke treatment, the latest markup increasingly positions crypto markets as another part of the broader financial system — one expected to operate under many of the same compliance, reporting and risk-management standards as traditional financial institutions.
Whether this approach satisfies either side of the debate remains unclear ahead of Thursday’s markup session.
For crypto advocates, the CLARITY Act could provide the regulatory certainty the industry has long demanded. For critics, however, the bill still raises unresolved questions around enforcement, political influence and the long-term risks of integrating digital assets more deeply into the US financial system.
