CLARITY Act Senate Path Narrows as Bipartisan Support Frays

CLARITY Act Needs 60 Votes to Advance

The immediate challenge was reaching the 60 votes needed to proceed with debate.

Republicans held 53 Senate seats, meaning they needed at least seven Democratic votes even if every Republican supported the measure.

Several factors complicated that math.

Sens. Susan Collins and John Cornyn had not committed to supporting the legislation before the vote.

Collins raised concerns that the bill could accelerate deposit outflows from community banks.

Sen. John Curtis said he planned to support beginning debate but distinguished that procedural vote from his position on final passage.

Curtis said he would not support the current version in a final vote.

The White House increased outreach to Republican senators as leaders tried to prevent banking-related concerns from creating more defections.

That left negotiators with two problems: preserving Republican support while attracting enough Democrats to reach 60 votes.

Democrats Submit New CLARITY Act Counterproposal

Democratic senators met on the evening of September 14 in Senate Minority Leader Chuck Schumer's office.

They agreed to prepare another proposal for Republican negotiators.

By the following day, Democrats had delivered the counterproposal, according to three people familiar with the negotiations.

The specific changes had not yet been made public.

Sen. Mark Warner said Democratic negotiators made another offer because they believed the latest Republican package still did not resolve their concerns.

Republican aides had described the package negotiated over the previous weekend as their “final” offer.

Democrats nevertheless continued seeking amendments.

Ethics Rules Remain a Major Dispute

One of the biggest unresolved issues involved financial-conflict restrictions for senior government officials.

The latest Republican proposal included stronger ethics provisions, but Democratic Sen. Adam Schiff said they remained insufficient.

Schiff said the measures “don't go far enough.”

He argued that the provisions likely would not apply to the first family and would instead mainly cover federal employees.

Schiff also said there were “just too many carveouts.”

The dispute centered on who should be covered by the ethics restrictions and which exemptions should remain.

Sen. Cynthia Lummis argued that Republicans and President Donald Trump had already agreed to extensive Democratic demands.

“It's becoming clear that some Democrats simply won't get to yes, no matter what we put in the text,” Lummis said.

She said Trump had accepted two ethics provisions requested by Democratic negotiators.

Lummis added:

“We've given you everything you’ve asked for, yet you keep holding the bill hostage, demanding more and more and more. It's beyond frustrating. There's nothing left to give.”

State Attorneys General Push Back on Federal Preemption

The CLARITY Act also faced opposition from 18 state attorneys general.

The bipartisan group was led by New York Attorney General Letitia James.

They warned that parts of the legislation could reduce states' ability to:

• Investigate crypto fraud
• Enforce investor-protection laws
• Apply state registration requirements
• Police misconduct involving digital-asset businesses

Their concerns focused partly on provisions that could expand federal authority in ways that override state registration systems.

The attorneys general asked Congress to preserve state powers over digital-asset enforcement.

Banks Raise Concerns About Stablecoin Rewards

Banking groups raised a separate set of objections.

Eight banking associations sent a joint letter on September 14 to Senate Majority Leader John Thune and Schumer.

They argued that the Republican compromise did not do enough to protect banks from customers moving deposits into stablecoin products that offer rewards or yield.

The current legislation contains a mechanism called a “Circuit Breaker.”

It would give the U.S. Treasury Secretary additional authority to restrict stablecoin rewards if substantial deposit outflows from community banks occurred.

Banking groups said the safeguard would come too late.

“A safeguard that is only activated after substantial deposits have already flowed out is no safeguard at all,” the associations said.

They want stronger language preventing stablecoin providers from making payments that function economically like interest on customer balances.

These banking concerns overlap with Collins' objections and added more pressure on Republican senators.

Crypto Executives Push for the Bill to Advance

Crypto executives made a final push for the Senate to move ahead with the legislation.

Coinbase Chief Policy Officer Faryar Shirzad argued that Democrats had already secured significant changes to the bill.

He said the current draft satisfies the seven principles Democratic senators previously outlined for digital-asset market-structure legislation.

Those areas included:

• Regulatory jurisdiction
• Issuer oversight
• Illicit-finance safeguards
• Conflicts of interest
• Consumer protection

Shirzad also said Democrats had secured 126 additional changes.

“Democratic negotiators played a major role in getting it here,” Shirzad said. “They should vote for it.”

Ripple CEO Brad Garlinghouse also called for lawmakers to move the bill forward.

“Perfect can't be the enemy of good,” Garlinghouse said.

Crypto companies have pushed for federal legislation that creates clearer rules for digital-asset businesses and defines the responsibilities of U.S. regulators.

Political Concerns Add Another Layer

The debate was not limited to the bill's regulatory provisions.

Some House Democrats who previously supported crypto legislation had also raised concerns about political spending by crypto-industry-backed super PACs.

They questioned whether those groups would support them in future elections despite their earlier votes for digital-asset legislation.

That added an electoral dimension to the negotiations as lawmakers weighed both policy and political considerations.

A Procedural Win Would Not End the Debate

Even if the CLARITY Act cleared the procedural vote, that would only begin Senate consideration.

It would not mean the bill had passed.

Lawmakers could spend much of the remainder of September negotiating and voting on amendments covering areas such as:

• Ethics rules
• Stablecoin rewards
• Community-bank protections
• State enforcement authority
• Other contested provisions

A separate final-passage vote would still be required.

The bill's path therefore remained uncertain even if supporters reached the 60 votes needed to begin debate.

Lummis warned that failing to advance the legislation would “drive the digital asset industry overseas, leave consumers vulnerable, and sideline American [crypto] leadership.”