Senate Banking Committee Advances CLARITY Act Despite Warren's Warnings

Introduced in May 2025 by House lawmakers, the CLARITY Act aims to create clearer rules for the US crypto industry, including crypto exchanges, brokers, stablecoins, and consumer protections.

Thursday's vote was largely along party lines, with Democratic Sens. Ruben Gallego and Angela Alsobrooks joining Republicans in support of the legislation.

The committee vote now moves the CLARITY Act closer to a full Senate vote. The Senate Agriculture Committee has already approved its portion of the legislation, and the two versions will now be combined into a single bill before heading to the Senate floor for further debate and a final vote. 

If approved by the full Senate, the bill would still need to pass the House, once more, before reaching President Donald Trump’s desk to be signed into law.

A long road

The move comes after years of debate among lawmakers and regulators over how cryptocurrencies should be regulated in the US. 

Much of the discussion has centred around whether digital assets should fall under the oversight of the US Securities and Exchange Commission (SEC), which regulates securities, or the Commodity Futures Trading Commission (CFTC), which oversees commodities like oil and gold.

Another major point of debate surrounding the bill has been stablecoins and crypto yield products. The latest version of the CLARITY Act includes provisions that would prevent firms from offering passive, bank-like interest on payment stablecoins. Stablecoins are digital assets that are typically pegged 1:1 to fiat, such as the US Dollar. 

Bitcoin gains

Isaiah Douglass, managing director at Swan Bitcoin, a Bitcoin-only financial services company, told Sandmark the bill could give crypto firms clearer rules for operating in the US by formally placing Bitcoin (BTC) and certain other digital assets under CFTC oversight instead of SEC securities laws.

"In practical terms, this is the first federal legislation that treats Bitcoin the way it should have been treated from the start: as property you can own, use, and transact with under a predictable set of rules," Douglass said. 

Bitcoin briefly climbed to a high of $81,958 following the committee vote, rising about 3.5% on the day, according to CoinGecko. It has since retraced to $81,537, still up nearly 3% over the past 24 hours. 

Clashes 

The Senate Banking Committee’s markup of the CLARITY Act grew heated on Thursday as lawmakers clashed over the future of crypto regulation in the US.

Banking Committee Chair Tim Scott defended the legislation during the hearing, arguing the bill was necessary to provide clearer rules for the crypto industry after years of regulatory uncertainty.

"For years, the digital frontier was trapped in a regulatory gray zone," Scott said. "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."

However, Democratic Sen. Elizabeth Warren argued the legislation does not do enough to stop corruption or illegal activity in the crypto industry. She accused President Trump of benefiting financially from crypto while influencing policy around the sector. "Trump’s crypto corruption" has already led to "$1.4bn in gains from crypto deals alone," Warren said.

Warren also warned that Iran is exploiting crypto services to move money around, while drug cartels are shifting activity into crypto because "cops can’t keep up." The Massachusetts senator said the current version of the bill "puts our national security at risk."