At some point, progress on the crypto sector’s top policy priority, the Digital Asset Market Clarity Act, becomes an insurmountable math problem, without enough time in the US Senate’s work schedule to allow for its passage. But the bill has already been formally submitted to the Senate calendar, and industry lobbyists are still looking for a last-minute victory.
There are about eight weeks of time available in the Senate before lawmakers disperse for summer vacation and the political demands of midterm congressional elections. And as the election season becomes more urgent, the appetite for legislative cooperation could also take a hit.
In that brief period of work in the upper house of Congress, the Clarity Act would need to go through several procedural steps that can only begin once the market structure bill is finalized, a goal that still requires some major disputes between political parties and the White House to be resolved.
The Clarity Act would establish a customized regulatory regime for cryptocurrencies in the US, an idea that has significant bipartisan support. But even if the bill were ready to go into action, a significant number of Senate issues are competing for time and attention. And some of them haven’t done very well.
A deadline to extend the Foreign Intelligence Surveillance Act (FISA) looms this month, and reaching a long-term agreement on US spy powers has been a challenge, including on inserting a ban on central bank digital currencies (CBDCs). Senate leaders had warned that the CBDC component could kill the effort in that chamber, and there had been an impasse between the House of Representatives and the Senate that is still being resolved, but the latest version of the bill reportedly includes a temporary ban that ends in three years.
However, even more fireworks emerged from the process to pass an immigration enforcement funding bill. The spending plan was derailed by an internal outcry from Republicans who oppose President Donald Trump’s $1.8 billion Justice Department “anti-armament” fund to compensate allies. A court ordered the plan halted during a dispute over its legality, and Acting Attorney General Todd Blanche reportedly bowed to pressure Tuesday to assure lawmakers that the idea is dead, which is expected to reopen the way for the immigration bill.
Essential invoices
Those two bills (FISA and immigration) must pass for some aspects of the federal government to continue functioning, giving them priority over other jobs. Crypto lobbyists are expressing quiet confidence that they will be resolved soon.
But once they pass, that doesn’t necessarily mean the cryptocurrency bill, which was formally referred to the Senate calendar this week, will move forward smoothly.
Adding some potential drama has been President Trump’s insistence that one of the legislative efforts (FISA, or a bill reforming US housing regulations) be saddled with his effort to impose voter ID and citizenship testing at the polls before the midterm congressional elections, which he says will lead to his impeachment if the Democrats win. Adding that controversial bill on top of another would dramatically decrease the chances of the host bill passing, but Trump has previously threatened to halt congressional progress on other issues if lawmakers don’t make it happen.
That housing bill you’re considering may be among the Clarity Act’s big competitors for floor time. Bipartisan legislation to encourage U.S. housing construction (while restricting certain institutional investors) has been pushed back and forth by the House and Senate, but leaders in both chambers are reportedly working on a version that will satisfy both. Even if all goes well, the Senate calendar is a zero-sum proposition at this stage, meaning that every hour spent on anything other than Clarity reduces the odds that the chamber will have enough bandwidth for the bill.
The Senate is also struggling with a debate over a war powers resolution aimed at stopping US military action in Iran. And action is also expected in the coming days on legislation known as the farm bill that may get a hearing in the Senate Agriculture Committee that is also supposed to be working on a final version of the Clarity Act, plus possible movement on the National Defense Authorization Act for next year.
summer plans
Although White House officials had expressed an Independence Day goal of having the Clarity Act passed by Congress early next month, several lawmakers have suggested it be in late July or even early August, the last week before the start of the long congressional recess.
“Under my leadership, we will codify a FUTURE-PROOF digital asset market structure that cryptocurrency haters won’t be able to undo,” the president wrote in a recent post on his social media site. “The new frontier of finance is being built in America, and ‘TRUMP’ will NEVER disappoint Crypto!”
His encryption promise may depend on what Trump is willing to allow in the Clarity Act that involves an ethics provision aimed directly at him: prohibiting government officials from having personal interests in the crypto industry. A bill without such limits is widely seen as a deal breaker for Senate Democrats, but crypto experts suggest a runway period has been mooted that may not force Trump to divest from his own interests.
The Clarity Act was recently approved by the Senate Banking Committee in a close bipartisan vote that generated much fanfare from the industry. But partisan approval of a parallel version is now being litigated in the Senate Agriculture Committee on certain points to appeal to Democrats on that committee, including a possible requirement that the Commodity Futures Trading Commission, a major crypto regulator, get nominations from the White House to fill its four commissioner vacancies (two Republicans and two Democrats).
Fights in progress
Banking industry lobbyists are also expected to continue criticizing the bill, which includes a section on the performance of stablecoins that bankers see as a threat to their deposit base. And decentralized finance (DeFi) interests are still trying to acquire more legal protection for developers who don’t want to be punished for illicit use of their work.
So the bill isn’t ready, and cryptocurrency advocates in Washington say it hasn’t gotten off to a particularly fast start into June. Once the legislation is finished, including combining the versions of the banking and farm panels and adding an ethics provision, Senate leadership would need to set aside some time, potentially a full week (one of the precious eight left before the August recess).
If not by then, there’s another bit of time left in September, and then comes the biggest wild card on the Congressional calendar: the so-called “outgoing duck” session in which members of this Congress will continue to work for about four weeks after the election has effectively fired some lawmakers and others are retiring. Desperate deals have been made during those sessions to pass important legislation, but the odds are long.
Senator Cynthia Lummis, who chairs the digital assets subcommittee of the Senate banking panel, has been issuing a steady stream of encouragement to push the Clarity Act.
“We are closer than ever to a working digital asset market structure,” Lummis posted Tuesday on social media site X. “Now is not the time to back down.”
Read more: Clarity Act clears US Senate committee, headed to final test in Congress
