After weeks of tussle, the U.S. Clarity Act finally passed the Senate Banking Committee markup vote on May 14.
During the markup, the senators debate, amend, and vote on whether to advance the bill. The House passed its version of the crypto legislation last year.
Related: U.S. labor unions raise concerns over retirement risks in new bill
The proposed bill aims to create a comprehensive regulatory framework for virtual assets.
It classifies assets as securities and commodities so that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have clearly established boundaries in regulating assets.
The most contentious provision of the bill involved stablecoin yields which found a compromise between the banking and crypto industries.
While most cryptocurrencies like Bitcoin and XRP are volatile, a stablecoin is a cryptocurrency that tries to keep its value stable by being pegged to a "stable" asset.
For instance, Tether's USDT, Circle's USDC, and Ripple's RLUSD are pegged 1:1 to the U.S. dollar. It means the value of 1 USDC/USDT/RLUSD is nearly the same as that of 1 U.S. dollar. It is exactly why a stableoin is also called a "digital dollar."
The latest version of the Clarity Act from May 11 bans rewards on passive stablecoin holdings that are "economically or functionally equivalent" to deposit interest, but allows rewards for activities like trading, transactions or staking.
The bill also includes protections for software developers so that the illicit actions on the part of bad actors don't incriminate the developers.
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Clarity Act advances with 15-9 vote
The CLARITY Act received 15 votes in favor and 9 against at the Senate Banking Committee markup.
Ruben Gallego and Angela Alsobrooks were the lone Democratic Senators who voted in favor of the bill. But Alsobrooks said she wouldn't support the bill on the floor until outstanding issues were addressed.
Now, the bill advances to the Senate floor where Senators will try to merge it with the Senate Agriculture Committee's version.
Ethics provision amendment fails
Chris Van Hollen, the Democratic Senator from Maryland, also introduced an amendment to ban government officials, including the president, from holding business ties to the crypto industry.
The amendment aims to prevent conflict of interest and self dealing by the president or members of the House or the Senate, he argued.
"We have all seen the president and members of his family involved in corrupt crypto ventures and various crypto scams through World Liberty Financial."
Bernie Moreno, the Republican Senator from Ohio, objected to Van Hollen referring to Trump's World Liberty ties as "corrupt."
He said, " You're making conclusive comments about a person who's a good man who serves this nation, and to say, with no knowledge, that is committing a crime is a disgrace."
This amendment also failed with a 11-13 vote.
Warren raises Epstein ghost
However, Senator Elizabeth Warren (Democratic Party), who has been very critical of the Trump administration's crypto policy, raised the ghost of the disgraced financier and child sex offender Jeffrey Epstein during the markup hearing and introduced an amendment that would have called for federal bank regulators to "release bank supervisory information" about Jeffrey Epstein.
"Epstein was an early backer of crypto. He poured millions of dollars into Coinbase, one of the biggest benefactors of this bill, if it becomes law," Warren said.
"And that's no surprise, Epstein recognized crypto's potential as a tool to covertly facilitate illicit payments,"she added.
She said the amendment would shed light on what bank supervisors and banks themselves might have known about Epstein's activities.
Pro-crypto Senator Cynthia Lummis (Republican Party) responded that "confidential supervisory information is not germane to digital asset market structure."
The vote failed 11-13, but John Kennedy, the Republican Senator from Louisiana, said he would vote in favor of the amendment if the phrase "co-conspirators" was stripped out of the amendment.
Warren said she would accept the change in the language but Scott moved on regardless.
Amendments get voted on
Senator Mike Rounds proposed an amendment to adopt sandboxes for artificial intelligence (AI) tools. The vote passed with a 15-9 vote, which means it received bipartisan support in the committee despite Warren urging her party to vote in the negative.
Warren introduced an amendment to to "keep risky assets out of retirement accounts" failed in an 11-13 vote.
Senator Katie Britt of Alabama introduced another amendment to let certain types of retirement accounts invest in collective investment vehicles. But the amendment was withdrawn prior to a vote.
Warren introduced another amendment that failed the vote. It sought to address sanctions authority in the Clarity Act.
She, in particular, raised past instances like the U.S. authorities sanctioning the crypto mixer called Tornado Cash as it was used by alleged actors from North Korea to launder more than $450 million.
"These types of crypto services are designed to make it easy to launder a huge pile of money and making it hard for anyone, including our law enforcement officials, to tell where the money came from."
Lummis was critical of the amendment and argued that the bill already addresses sanctions authority. The amendment failed 11-13.
More on Clarity Act:
Lummis, Warren clash
The Senate Banking Committee Chairman Tim Scott opened the hearing by saying the bill keeps innovation in the U.S. by updating outdated rules while giving law enforcement better tools to go after "bad actors."
Lummis called it the "hardest piece of legislation" she's ever worked on and said it's crucial for the crypto leadership of the United States.
However, Warren sharply criticized the bill and said the bill is "just not ready." She said she wants more debate, more consumer protections, and she's raising concerns about national security and government officials with ties to crypto businesses.
None of the concerns regarding national security, money laundering, and conflicts of interest around political leaders' crypto ventures have been addressed in the current version.
Crypto industry welcomes compromise
Brian Armstrong, the CEO of the largest crypto exchange in the U.S., Coinbase (Nasdaq: COIN), said the bill "could reshape how Americans interact with money and financial markets."
He said both the crypto and banking sectors have made concessions and the latest version is a "true compromise."
"We met the asks of the bank lobby and the Senate,"he added.
Circle Internet Group (NYSE: CRCL) CEO Jeremy Allaire earlier said it's a "very good compromise" and the company was optimistic about the outcome. He admitted not everyone is going to be happy but said it's a "hard-fought compromise."
The bill is a top agenda for the president and the Congress, and it can unleash entrepreneurship in the broader digital assets market, he added.
Circle is a crypto company popular for its USDC stablecoin which currently accounts for around 24% of the total stablecoin market cap.
The company's chief strategy officer Dante Disparte hailed the Banking Committee for approving the legislation. It marks a "meaningful, bipartisan progress toward comprehensive digital asset regulation in the United States," he added.
"With the GENIUS Act, the U.S. has established a strong, bipartisan foundation for this growth. The next step is clear: Congress should advance market structure through CLARITY to provide greater certainty, enhance protections, and reinforce the dollar's role in the digital economy."
Ripple CEO Brad Garlinghouse earlier said the company stands behind the bill and hailed the Senate Banking Committee for an "incredible leadership."
"If the largest economy in the world is going to lead on crypto - and it must - this is the moment. Let's get it done!"he added.
Ripple's RLUSD stablecoin has a market cap of $322.27 billion.
Related: Over 100 crypto firms call on Senate to move forward with Clarity Act
This story was originally published by TheStreet on May 14, 2026, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
