CLARITY Act Stalls In Senate As Supporters Fall Short Of 60 Votes
By CU Today Staff —
WASHINGTON—The Senate on Tuesday blocked the CLARITY Act from advancing, dealing a major setback to legislation that would establish a comprehensive federal regulatory framework for cryptocurrency and other digital assets.
The procedural motion failed on a 49-50 vote, well short of the 60 votes needed to move forward.
The defeat came despite Senate Republicans releasing revised legislation over the weekend containing 126 changes they said responded to Democratic concerns. Reuters reported before the vote that the revisions included tougher ethics provisions covering public officials and additional enforcement authority for state attorneys general. Democrats, however, continued to argue that the provisions did not go far enough to prevent public officials, including President Donald Trump, from benefiting financially from cryptocurrency interests.
The bill also continued to face resistance from the banking industry over stablecoins. Reuters reported that banking groups argued the revised language did little to address their concern that rewards paid on stablecoins could draw deposits away from banks and reduce their ability to lend. Eight banking trade groups, including the Independent Community Bankers of America, made a final push Monday for tighter restrictions, according to CoinDesk. The latest draft included a mechanism allowing the Treasury secretary to intervene if stablecoins caused substantial deposit outflows, but banking groups argued regulators should not have to wait for significant deposit losses before acting.
"Today’s vote gives lawmakers an opportunity to continue working on the bill to find consensus around outstanding issues. America's Credit Unions' members and the 146 million Americans they serve cannot be sidelined, and digital asset reform must recognize the credit union model directly. We will continue our advocacy to protect consumers, support local lenders, and ensure Capitol Hill treats credit unions with full statutory parity," said America's Credit Unions President/CEO Scott Simpson.
The Defense Credit Union Council, which Tuesday morning voiced concerns over the current bill, said the failure to invoke cloture on the motion to proceed to the CLARITY Act should be a reason to renew negotiations not abandon them.
"We need to keep moving toward a framework that protects consumers and gives credit unions the legal certainty, authority, and operational structure to responsibly meet their members’ digital-asset needs. A procedural setback should not become a permanent obstacle to progress," stated DCUC Chief Advocacy Officer Jason Steverak. "DCUC has acknowledged meaningful improvements in the proposed legislation’s recognition of credit union services, accounts, and qualifying subsidiaries. We want Congress to preserve those improvements and address the remaining gaps. Our concerns are about making this framework work for credit union members, not standing in the way of responsible innovation.”
Stverak said equal treatment remains essential.
"The bill’s safeguards addressing transfers of interest-bearing community-bank deposits into payment stablecoins should expressly cover comparable losses from credit union share accounts and recognize dividends alongside bank interest. The funding that supports affordable lending deserves fair consideration regardless of an institution’s charter. We are not seeking an advantage over banks; we are seeking equal treatment for the members we serve," he said. "Credit unions also need more than permission on paper. They need consistent roles for NCUA and state credit union supervisors, workable participation through credit union service organizations and qualified partners, clear custody requirements, fair access to payment infrastructure, and realistic implementation timelines. Those provisions should support safe member service while maintaining strong consumer protections and appropriate oversight.”
“For defense credit unions, the framework must also account for military service overseas. Congress should resolve the residence-related uncertainty we have identified and protect continuity of otherwise lawful services for eligible servicemembers and their families. Official orders should not create unnecessary barriers between military households and their financial institutions," continued Stverak. “We urge senators in both parties to stay engaged, address these concerns, and find a path forward."
Tuesday's vote was not a vote on final passage but on whether to proceed with consideration of the legislation. The Senate Banking Committee had advanced the Clarity Act 15-9 in May with bipartisan support. With the procedural vote now failing and relatively few legislative weeks remaining before the midterm elections and the end of the 119th Congress, supporters face a difficult path to revive the measure this year.
Originally reported by CU Today.