Crypto industry scores win as Clarity Act regulation bill clears Senate hurdle

The cryptocurrency industry notched a key win after a Senate panel on Thursday approved the Clarity Act, the first wide-ranging piece of legislation pertaining to the new industry.

The Senate banking committee largely voted along party lines, 15-9, with Democratic Sens. Ruben Gallego, of Arizona, and Angela Alsobrooks, of Maryland, joining all Republicans on the panel to vote for the bill.

The measure has a long way to go before becoming law, given both powerful opposition and the fact that it would need to clear the full Senate as well as the House before heading to President Donald Trump's desk.

During the hearing, both Republicans and Democrats committed to continue working through areas of disagreement, including how best to ensure bad actors using digital assets can be caught and ethics language to address the issue of elected officials, such as Trump, profiting from crypto.

Sen. Mark Warner, D-Va., one of several Democrats who has worked with Republicans on the bill, said while he was in "crypto hell the last couple months" he hopes to continue working on the bill and "get to crypto heaven."

"I guess I'm right now in crypto purgatory, but I'm looking forward to getting all the way there," he said.

Chair Tim Scott, R-S.C., said it was important to move the measure forward to provide guidance and standards for the crypto industry.

"For years, the digital frontier was trapped in a regulatory gray zone," Scott said during the hearing. "Developers, entrepreneurs and investors were left with uncertainty. They faced confusion and enforcement actions, when instead, the government should have been crafting clear rules of the road."

The bill was championed by numerous crypto companies, including Coinbase, Circle and Ripple, which want to see a degree of regulation and oversight of their industry to help encourage investors. Venture capital firm Andreessen Horowitz is another key supporter.

The White House has also pushed for the bill, at times becoming active in negotiations between banks and crypto groups. Trump and his family have made billions of dollars from meme coins and cryptocurrency venture World Liberty Financial.

But the bill has opponents in the banking, law enforcement and labor union sectors.

The banking industry raised concerns that the measure could allow crypto groups to offer interest-like payments to stablecoin holders and lead to decreased bank deposits and a lack of capital for loans. The crypto industry said the measure allows for rewards only when stablecoins are spent.

Law enforcement groups say the legislation doesn't do enough to prevent illicit financial transactions through digital assets and would make it harder to catch bad actors.

Major labor groups, including the AFL-CIO, warned senators that efforts to legitimize crypto could jeopardize financial stability and, in turn, retirement and pension accounts.

During the committee meeting, Democratic senators offered amendments to address some of these issues, but all were either voted down or Scott said they were not written correctly and did not allow them to be offered.

If the bill is able to clear the full Senate, it would also need to be passed by the House, which approved a different version of the bill last fall.

*Correction: This story has been updated to reflect that Sen. Angela Alsobrooks was one of two Democrats to vote for the bill. A previous version named only one Democrat.*