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The CLARITY Act entered its final hours before a key Senate vote with negotiations still unresolved. Banking groups demanded tighter stablecoin rules, while Senate Democrats prepared a counterproposal to the Republican draft.
The pressure comes after Republicans released what they called their “last, best and final” text. That version incorporated 126 changes requested by Democrats, yet disputes over ethics, stablecoin rewards and developer protections remained.
The Senate needs 60 votes to invoke cloture and move toward floor consideration. Industry executives remain optimistic, but lawmakers had not publicly secured that threshold by Monday night.
Democrats Reject the Clarity Act Draft Revision
A bipartisan group of 18 U.S. state attorneys general, led by New York Attorney General Letitia James, is urging Congress to reject the Digital Asset Market Clarity Act. The attorneys general argue that federal preemption provisions in the Clarity Act crypto bill could limit states’ ability to investigate cryptocurrency fraud and protect investors.
On Tuesday, September 15, the Senate will hold a procedural vote on the crypto legislation. Currently, the debate centers around establishing federal crypto market rules without weakening state-level investor protections.
Speaking on the development, Eleanor Terret from Crypto In America wrote: “it appears that a growing number of Senate Democrats who have been open to supporting the Clarity Act remain unhappy with where the ethics provisions stand”.
Banking Groups Demand Strict Actions on Stablecoin Yields
Upon deep diving into the arguments presented by the Attorneys Generals yesterday, expert Omid Malekan cited that the current debate on stablecoin yields is similar to the battle of the money market funds in the 1970s.
Eight banking trade groups have criticized the “circuit breaker” added to the latest CLARITY Act text. These groups argue that the provisions would come into play only after major flight of capital from bank deposits to stablecoins.
In a letter to Senate leaders, the groups called for further tightening of the bill’s stablecoin rewards provisions. They also pointed out the loopholes that could permit interest-like payments on stablecoin balances.
The banking groups’ core demand remains unchanged i.e., tighter restrictions on stablecoin rewards. Nate Geraci, crypto industry expert and President of Novius Dius Wealth Management, said:
“The only reason Clarity Act hasn’t passed yet is b/c crypto disrupts the traditional banking model. It’s really that simple. We can talk ethics, BRCA, etc”.
“But it all boils down to crypto reducing the need for banks as intermediaries & disrupting net interest income model. And the politicians who are incentivized to support that model,” he added.
Crypto Regulation Bill Clarity Act Gets a Counterproposal
Following the review on September 14, Sen. Ruben Gallego (D-Ariz.) told reporters that the latest crypto ethics proposal in the CLARITY Act “leaves a lot to be desired.” Moreover, he added that he plans to submit a counterproposal very soon.
A group of Senate Democrats is to meet on the evening of Sept. 14 to discuss strategy and respond to the revised text from Republicans the day before. The meeting comes less than 24 hours before the bill faces its first major test on the Senate floor. The Republicans had already stated that the last version was their “last, best and final” offer.
Eleanor Terret reported that industry sources have expected the Democratic counterproposal to address most, if not all, of the targeted changes Republicans made to the bill. It remains unclear whether Republicans will make further concessions ahead of the vote. The goal is to get 60 votes for the CLARITY Act Bill to pass.
The Clarity Act Bill Needs A Total of 60 Votes
Patrick Witt, the White House crypto advisor, said he feels “very good” about the initial vote in the Senate on the crypto regulatory bill. He noted that the legislation would regulate the crypto industry for the first time, at the federal level.
“Whether or not we get 60 votes is going to be a political calculation, not a policy calculation because this truly is a bipartisan bill that is worthy of support,” Witt said.
Coinbase CEO Brian Armstrong said he is “pretty optimistic” that the CLARITY Act will secure more than 60 votes in the Senate on September 15. Armstrong said thousands of hours of bipartisan work have gone into the legislation. He described the upcoming vote as a “massive moment” for U.S. leadership in crypto and finance.
This article is for informational purposes only and does not constitute legal, financial or investment advice. Legislative proposals can change during negotiations and may not become law in their current form.
