CLARITY’s Combined Text Is Here. Now It Needs Votes
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The Senate’s combined CLARITY Act text was released Wednesday, bringing together the market-structure legislation advanced by the Senate Agriculture Committee in January and the Senate Banking Committee in May. The Agriculture Committee advanced its Digital Commodity Intermediaries Act on January 29, while Banking approved its portion of CLARITY by a 15–9 vote on May 14. The new text uses those bills as its two core divisions while adding ethics restrictions, law-enforcement provisions, changes to the GENIUS Act and several other negotiated additions.
The combined bill is 616 pages long and contains 104 numbered sections: Section 1 plus 103 sections across four divisions. Division A contains the Banking Committee product, Division B contains the Agriculture Committee product, Division C contains the new ethics package and Division D establishes the bill’s effective date.
Here is where several of the biggest outstanding issues landed:
Issue | What the combined text does | Change from prior drafts |
Government ethics | A new six-section division prohibits covered senior officials and their spouses from issuing or sponsoring digital assets for consideration while in office. It also restricts intermediaries from listing those assets, creates disclosure and blind-trust provisions, places enforcement exclusively with the Justice Department and sunsets at noon on January 20, 2029. | New. Neither committee-approved draft contained this ethics division. The DOJ-only enforcement mechanism and 2029 sunset are already major Democratic objections. Read the combined text. |
Developer protections and BRCA | The bill retains both the general software-developer protections and the Blockchain Regulatory Certainty Act. BRCA protects non-controlling developers and infrastructure providers from being treated as money transmitters solely because they publish software or provide non-custodial services. | Largely unchanged. Current §10604 closely tracks Banking §604, while additional developer protections appear in §§10601 and 20209. Some exclusions were removed from the DeFi-specific section, but the broader standalone protections remain. See the bill text. |
Former Banking §301 (now §10301) | The standard for identifying a controlled, non-decentralized protocol now reaches persons acting through an “agreement, arrangement, or understanding” to act in concert. | Tightened. The May draft referred only to an “agreement to act in concert” and expressly excluded activities such as transaction validation, operating nodes or oracles, and supplying bandwidth. Those named exclusions are no longer in §10301, although many remain protected elsewhere in the bill. A narrower security-council exception survives. See current §10301. |
Self-custody | The Keep Your Coins Act remains in the bill, protecting individuals’ ability to hold and transact with their own assets. New §20216 also provides that inactivity or dormancy alone cannot cause lawfully self-custodied assets to be treated as abandoned, unclaimed, forfeitable or subject to state escheat. | Expanded. Keep Your Coins is substantially retained from the Banking text, while the dormancy and abandoned-property protection is new. See §§10602 and 20216. |
Stablecoin yield and rewards | Digital-asset service providers may not pay interest or yield solely for holding a payment stablecoin or based on a customer’s balance. Bona fide activity- and transaction-based rewards remain permitted when they are not economically equivalent to deposit interest. | Substantially unchanged. The compromise contained in Banking §404 carries into current §10404. See current §10404. |
Tokenization—formerly §505 | Current §10505 directs the SEC to study tokenized securities and generally provides that a tokenized security receives the same regulatory treatment as the underlying security it represents. The SEC may adapt compliance mechanics for distributed-ledger systems. | Retained and renumbered. The provision closely tracks Banking §505. See current §10505. |
GENIUS Act modifications | New §11004 makes 22 lettered changes to the GENIUS Act, including credit-union parity, state-regime deadlines, federal enforcement and emergency authorities, AML and sanctions provisions, foreign-issuer supervision, reserve and rehypothecation corrections, territorial treatment and a federal custody floor. New §10906 separately addresses compliance with lawful orders involving stablecoin freezing, burning, seizure or reissuance. | New and more than merely technical. Although titled “technical corrections,” several provisions make meaningful policy and enforcement changes. See §§10906 and 11004. |
CFTC registration and custody | The Agriculture bill’s expedited-registration provision has been replaced by a more detailed notice-of-intent regime covering disclosures, financial resources, cybersecurity, examinations, customer-asset segregation and regulatory supervision. The bill also creates a dedicated qualified digital-asset custodian framework. | Substantially revised and expanded. The transition pathway is more prescriptive than the January Agriculture text, and qualified-custodian registration is new. See §§20104 and 20205. |
Enforcement and investor protection | A new law-enforcement title addresses elder and “pig-butchering” scams, state and local enforcement grants, investigator training, cyber capabilities and coordinated scam enforcement. New §10111 also preserves existing anti-fraud actions, private rights and federal and state enforcement authorities, subject to the bill’s asset-classification rules. | New. These provisions materially expand the government’s investigative, enforcement and victim-protection toolkit. See §§10111 and 10901–10906. |
The immediate Democratic reaction was negative. Sen. Elizabeth Warren, the bill’s most consistent Democratic critic, said in a video Thursday that the latest draft “would make it easier for criminals, cartels and terrorists to move money and finance their operations.” Her formal statement also attacked the ethics package’s DOJ-only enforcement mechanism and declared that the bill “should be dead on arrival.”
More consequentially for the vote count, seven Democrats who have been negotiating with Republicans (Sens. Mark Warner, Angela Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper and Raphael Warnock) issued a joint statement saying the current text “falls short,” but specifically demanded stronger provisions on ethics, consumer protection, illicit finance, conflicts of interest and market integrity, while saying they would continue negotiating. Sen. Kirsten Gillibrand was notably not among the seven signatories.
No floor vote has been scheduled. Asked whether CLARITY and other pending legislation could be completed before the summer break, Majority Leader John Thune told Punchbowl: “I don’t think we’ll be able to get them done. I would like to at least get Clarity started. We’ll see where the votes are.” Subsequent reporting indicated that leadership may try to begin the floor process without completing it before senators leave Washington. (It’s not clear how directly Thune was casting doubt on CLARITY timing, or whether he was just generally commenting on calendar constraints and Punchbowl played up his CLARITY angle).
The Senate calendar is now the central constraint. The chamber is scheduled to remain in session through Friday, August 7, with its formal state work period beginning Monday, August 10.
OUR TAKE
Treasury Secretary Scott Bessent said this week that CLARITY was on the “1-yard line”. Maybe it is. But one yard can be the longest yard on the field. And like football, politics is a game of inches.
We are in the eleventh hour, the 91st minute of stoppage time and, increasingly, Hail Mary territory. The combined text is finally public, but the coalition required to pass it is not visibly in place.
Republicans officially hold 53 seats, but Sens. Josh Hawley and Rand Paul have been reported as likely no votes, while Sen. Mitch McConnell has not voted since his June hospitalization. That leaves a dependable Republican starting point of roughly 50 before considering any additional defections. In other words, the bill may not even have a clear majority-party majority in hand, much less the 60 votes required to overcome a filibuster.
Democrats who were supposed to provide the pathway to 60 votes have instead locked arms against the current draft. This despite the fact that Democrats have truly won many concessions from Republicans throughout the process.That’s our estimate from reporting and members’ public statements, not a confirmed whip count, but the arithmetic is looking brutal at this moment in time.
It increasingly appears that passing CLARITY will require a true grand bargain: a legislative circus trick that pulls a rabbit out of a hat. Taking the negotiating Democrats’ statement at face value, a Republican such as Thom Tillis, Cynthia Lummis, or Bill Hagerty may need to secure additional movement from the administration on ethics and then persuade Democrats that the resulting package is sufficient. But that bargain probably needs to emerge within the next 4 days, not the next 4 weeks.
Although the Senate is formally scheduled to remain in Washington through August 7, we believe the practical deadline to start the voting process is next Thursday night, July 30. Leadership needs time to file cloture, begin debate, process amendments, pass the bill, and resolve any remaining issues. Every day spent negotiating the terms is one fewer day available to execute the floor strategy.
As we have repeatedly written, if CLARITY does not pass the Senate before members leave Washington for August, its prospects of becoming law in 2026 diminish substantially. September offers only a narrow window before appropriations fights and election politics consume the calendar. The calendar is no longer merely an obstacle. It is now the enemy.
Are we Tom Brady and the Patriots, down 28–3 and about to complete one of the greatest comeback victories in history? Or are we Drake Maye and the Patriots, a great team with a real opportunity, but who ultimately didn’t really have a chance against the Seahawks? Is the deficit simply too large and the clock too short? We will probably know within the next seven days.
When we last published odds in late June, we had already reduced our post-Banking-markup optimism to a 50–50 coin flip. With the calendar running out, the negotiating Republicans and Democrats publicly opposing the current ethics language and passage increasingly dependent on a grand bargain that does not yet exist, it is difficult to credibly remain at 50%.
We are lowering our estimate of the probability that CLARITY becomes law in 2026 to 30%. We hope we are wrong. This is a strong bill that would substantially improve the United States’ regulatory posture toward crypto, protect investors and customers, provide powerful new tools to combat illicit activity, promote innovation and reinforce American capital-markets leadership.
The time for incremental negotiations is over. The bill needs a last-ditch effort, and it needs leadership. Pass the bill! –Alex Thorn
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