As US senators began the long-awaited hearing called to advance legislation on cryptocurrency market structure, they admitted there was still a gap between Republicans and Democrats over the latest version of the Digital Asset Market Clarity Act.
Thursday’s Senate Banking Committee hearing, known as a “margin” hearing to weigh dozens of amendments to revise and reform the bill’s language, represents a key moment in the process of getting this political effort over a long-standing hurdle. Republican senators may be the only supporters at this point, but the ultimate goal is to end up with a bipartisan version that can pass the Senate with enough Democratic support.
Committee members began their session with a nod to the difficult bipartisan talks that still apparently led to a stalemate Thursday over the latest version of the legislation.
“We won’t agree on this today, but I hope that in the end we get a legislative product that is good now and gets another bite of the apple when it comes to the floor,” said Chairman Tim Scott. “This is not over and I hope no one thinks it is over. This process has been transparent. It has been difficult and it has been clear, and that is good news for the American people who are watching this process.”
Until the last moment, lawmakers and their staff sought to debate outstanding issues, including the bill’s treatment of decentralized finance (DeFi) and a major government ethics provision to keep top officials out of the crypto industry. If the bill passes along party lines at the end of the hearing, 13-11, it still moves toward next steps, including merging with a similar bill that already passed the Senate Agriculture Committee.
“This is by far the most difficult legislation I have ever worked on,” said Sen. Cynthia Lummis, a Wyoming Republican who chairs the panel’s digital assets subcommittee. He noted that this is a “case of first impression” and seeks to address new innovations. Lummis said lawmakers negotiating the bill will continue working on the “1% of remaining issues that did not come to fruition before today, despite our ongoing negotiations.”
A fundamental disconnect was evident at the hearing, because senior Democrats, including ranking member Elizabeth Warren, were the most vocal critics of the legislation, while the many Democrats who were actively involved in negotiations with Republicans did not participate in the opening remarks.
“This bill is simply not ready for prime time,” Warren said. “First, the bill before us would blow a hole in our securities laws that have protected investors since 1929. Most Americans don’t want their pensions at risk so a few crypto millionaires can profit from their own profits. Second, this bill declares an open season on defrauding American consumers who use cryptocurrencies.”
Democrats objected to many amendments that were thrown out on procedural grounds before the hearing began, although Scott maintained that the procedural dispute began when Democrats were targeting a Republican amendment.
The hearing began by striking down most of the Democratic amendments one by one along party lines, and lawmakers briefly presented their arguments for each one. Partisanship recalled the similar margin earlier this year on the agriculture panel, although some provisions received successful votes Thursday, such as an amendment concerning the extension of government protections involving the practice of calculating the margin between portfolios.
While Democrats continued to express resistance to the Clarity Act’s language and argue that it had not answered important questions about illicit finance and consumer protections, Republicans argued that much of the bill addresses those concerns, which currently have no federal protections, for the first time.
Senator Thom Tillis, the Republican who helped lead talks on a long-standing sticking point regarding the performance of stablecoins, responded that “the status quo, honestly, is unacceptable.”
Read more: The Clarity Act, in person, presented by the US Senate Banking Committee before the hearing
