CLARITY Act Faces July Senate Test

White House Moves to Address Law Enforcement Concerns

The White House invited law enforcement organizations objecting to the Senate bill’s language to a meeting on Monday, June 29, according to a person briefed on the plan. The meeting was intended to work through objections over how the bill protects against illicit finance while preserving legal protections for crypto software developers.

White House officials, especially lead crypto adviser Patrick Witt, have sought to keep the CLARITY Act moving forward in the Senate by holding meetings with objectors, including law enforcement groups and Wall Street bankers. The main law enforcement tension is focused on the bill’s Blockchain Regulatory Certainty Act language, placed in Section 604 of the Digital Asset Market Clarity Act.

Section 604 seeks to ensure that software developers who do not ultimately control the tools they enable cannot be legally treated as “money transmitters.” Industry supporters view that shield as important for DeFi developers who build decentralized tools they do not control after deployment, while law enforcement critics argue the language could create a blanket exemption for parts of the crypto ecosystem that should still face Bank Secrecy Act obligations.

The National Sheriffs Association said in a May letter to Senate Banking Committee leaders, “No good reason supports giving mixers, tumblers, and DeFi a blanket exemption.” The association added, “While some software developers are not engaged in money transmitting or other activity that should subject them to BSA regulation, plenty of others are.”

Industry groups including the Blockchain Association defended the bill’s crime-fighting tools, arguing that the legislation creates new powers to pursue bad actors and that failing to pass a new law would leave regulators and law enforcement in a vacuum. At an industry-hosted event earlier in June, Witt said, “We’re putting real regulatory constraints on businesses and actors that currently live in a state of uncertainty.”

Witt also told law enforcement officials, “You should be the biggest cheerleaders for this bill, because this is really what is missing.” Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, has continued criticizing the legislation on illicit-finance grounds. Warren and other opponents routinely cite crypto’s use by criminal groups, drug cartels and human traffickers as a reason to strengthen safeguards before advancing the bill.

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Senate Calendar Narrows the Path

Senate Majority Leader John Thune was reportedly looking at bringing the CLARITY Act to the Senate floor in the coming weeks despite unresolved high-profile provisions. A cited Monday account said Thune may bring the bill up for a vote whether Democrats are ready or not, signaling that leadership may be willing to pressure the process instead of waiting for full consensus.

Senate Banking Committee Chairman Tim Scott posted on X on Monday that the Senate “should vote on crypto market structure legislation in July.” The bill would need 60 yes votes to pass the Senate, meaning Republicans cannot move it alone and would need a significant number of Democrats to support it.

The Senate began a state work period from Monday, June 29, until July 10. The Senate’s traditional August recess was scheduled to begin on August 8 and last five weeks, with lawmakers returning to Washington on September 14. About four weeks of Senate floor time remained before the summer break.

The unresolved Senate issues include the Blockchain Regulatory Certainty Act language, restoring the Commodity Futures Trading Commission to full strength, and an ethics provision that would ban senior government officials, including the president, from holding personal interests in the crypto sector. Multiple lawmakers said they would not vote for the bill unless it addresses potential conflicts of interest for senior government officials, including Democrats who voted for the bill during the Senate Banking Committee’s markup.

Congress was also tied up in President Donald Trump’s refusal to sign a major housing affordability bill sent to his desk. Trump said he would not sign any legislation until lawmakers approved a voter-identification bill requiring significant efforts from voters to prove citizenship.

The housing bill was expected to be formally sent to Trump on Monday, June 29, creating a test of whether his resistance would block legislation or whether the constitutional 10-day window could allow the bill to become law without his signature. Jaret Seiberg, a policy analyst for TD Cowen, said in a Monday note that he would “expect the housing bill to become law despite Trump last week canceling the signing ceremony.”

Seiberg added, “By our count, that means the bill becomes law on Friday, July 10, unless the President vetoes it or signs it into law earlier.” Thorn also pointed to two other unfinished Senate priorities competing for time: Section 702 of the Foreign Intelligence Surveillance Act, after the House failed to pass a reauthorization, and the National Defense Authorization Act for fiscal year 2027, described as must-pass legislation that often becomes a magnet for political fights.

JPMorgan Backs the Bill but Warns Against Loopholes

JPMorgan publicly backed the effort to establish a U.S. regulatory framework for digital assets, but its support came with a warning that clarity should close regulatory gaps rather than create new loopholes. The bank’s position came in a Monday blog post by Umar Farooq, global co-head of JP Morgan Payments, and Peter Muriungi, CEO of Digital Assets and Blockchain Solutions.

Farooq and Muriungi argued that pending market structure legislation could help the digital asset industry mature if it maintains investor protection, disclosure and market-integrity standards. JPMorgan said crypto assets and platforms that function like securities, exchanges or brokers should face the same standards as traditional financial products and institutions.

The bank said assets functioning like securities should continue to follow securities laws even if they are issued or traded on a blockchain. JPMorgan also said decentralized trading platforms serving as exchanges or brokers should be held to the same standards for market integrity, disclosure and customer protection.

JPMorgan acknowledged that tokenization and programmable money could make payments faster, shorten settlement times and improve cross-border money movement. Farooq and Muriungi warned that those benefits would only materialize if lawmakers pair regulatory clarity with strong safeguards.

JPMorgan urged lawmakers to impose robust safeguards on stablecoins and tokenized deposits, including bank-like capital, liquidity and consumer-protection rules. The bank warned that products resembling bank deposits should not operate outside the capital, liquidity and consumer-protection rules that apply to banks.

The bank focused heavily on stablecoin rewards and cashback-style incentives, warning that these features could make consumers believe they have protections that may not actually exist. JPMorgan warned that rewards or cashback for holding balances could increase the risk of rapid withdrawals during periods of market stress if consumers realize protections are weaker than expected.

JPMorgan’s warning echoes CEO Jamie Dimon’s broader criticism of stablecoin yield and deposit-like crypto products. Dimon has become one of the banking industry’s most vocal critics of stablecoin yield, with banks arguing that stablecoin issuers should not be allowed to compete with deposits without meeting equivalent capital and regulatory obligations.

Although lawmakers rejected the banking industry’s push for an outright ban during CLARITY Act negotiations, banks continue lobbying for tighter restrictions on stablecoin yield-like products. Dimon said earlier in June, “The banks will not accept it that way,” pledging to fight the issue “down to the wire.”

JPMorgan also argued that digital asset legislation must preserve anti-money-laundering and law-enforcement tools. The bank warned that broad exemptions for parts of the crypto ecosystem could create blind spots for illicit finance and market manipulation.

Lummis Sets July Deadline for Compromise Text

Senator Cynthia Lummis (R-Wyo.) announced on Wednesday, June 25, that Senate negotiators would release compromise text for the CLARITY Act over the July 4 holiday weekend, followed by a push for a Senate floor vote in July. Speaking on Fox Business’ Mornings with Maria, Lummis said, “We’re finally to the point where we’re going to put out a text over the July 4th, and then we’re moving in July.”

Lummis’ July 4 deadline directly rebutted Dimon’s criticism of the bill’s stablecoin provisions, positioning the dispute as a fight over whether the bill protects banks or allows crypto firms to mimic deposits. Lummis has announced she will not seek reelection in 2026, leaving her until January 2027 to lock in the digital asset regulatory framework she has spent three congressional sessions building.

The House passed H.R. 3633 in July 2025 by a 294–134 margin. The Senate Banking Committee advanced the bill 15–9 on May 14, 2026. Lummis has previously said she believes the bill can clear the Senate’s 60-vote cloture threshold despite sustained banking-industry opposition.

Lummis characterized the stablecoin compromise as “a commitment” rather than a concession. On May 14, Lummis posted, “Let’s go. Let’s show. Let’s rodeo. CLARITY is coming.” The August recess makes the July timing important because releasing text before lawmakers leave Washington is the functional prerequisite for any later vote.

Lummis acknowledged three remaining open negotiating items: provisions governing DeFi protocols, anti-money-laundering language and ethics clauses. Lummis confirmed that multiple AML protections are now included in the bill’s current draft.

The AML framework traces back to Lummis and Sen. Kirsten Gillibrand’s (D-N.Y.) 2023 Responsible Financial Innovation Act, which required crypto kiosk operators to maintain precise customer address records with FinCEN. The ethics provisions remain politically sensitive because they intersect directly with senior government officials’ crypto interests.

A prior closed-door session between Lummis, Sen. Gillibrand and White House Crypto Council Executive Director Patrick Witt collapsed without agreement after Republicans withdrew a provision that would have granted state attorneys general enforcement authority against the Department of Justice.

The Section 301 dispute remains the stablecoin front line. Dimon argued publicly that the crypto market structure bill would let crypto platforms offer rewards resembling interest-bearing bank deposits without equivalent regulatory safeguards, while banking trade groups advanced the same argument by citing deposit-flight risk and regulatory arbitrage.

Lummis rejected Dimon’s characterization and pointed to revisions made to Section 301. The revised language allows stablecoin issuers to operate rewards programs but prohibits benefits tied directly to account balances in a way that replicates traditional bank interest. Lummis said Dimon was wrong about the CLARITY Act and added, “He needs to read the bill.”

Earlier Banking Committee language had gone further by essentially banning crypto platforms from offering interest on inactive stablecoin deposits entirely. The current compromise is narrower and leaves unresolved how regulators would distinguish allowed rewards programs from prohibited balance-linked benefits that behave like bank interest.

The central issue is whether the remaining DeFi and ethics language can be resolved before the August recess without unraveling the Section 301 compromise that softened the banking sector’s strongest objection. The White House, Lummis, JPMorgan, law enforcement groups and industry lobbyists are now negotiating the boundary between market clarity, bank-style safeguards, software-developer protections and illicit-finance controls.