Lawmakers push CLARITY Act forward amid GENIUS Act uncertainty

The US House Financial Services Committee announced today it will conduct a markup on the CLARITY Act on June 10. This is a great development on the path to regulated digital assets in the US.

The bill aims to lay down a comprehensive set of rules for the growing world of cryptocurrencies. With bipartisan support and industry backers, it is now well on its way to one of the most disruptive periods of its journey — the committee review and amendment process.

The CLARITY Act is pitched to clarify how digital assets, including Bitcoin, Ethereum, and stablecoins, are regulated. For years, the crypto industry has complained about murky regulations and conflicting guidance from federal agencies.

The bill is trying to define what digital assets are. It also seeks to split the regulatory authority between the SEC and the Commodity Futures Trading Commission (CFTC).

That will allow innovation in crypto to continue — while ensuring that consumers and markets are protected from fraud and abuse, lawmakers who introduced the bill last week on May 29 said.

The Financial Services Committee will review the bill at the June 10 markup at the Rayburn House Office Building. They will offer amendments, argue over its wording, and mold it into a final version that could be sent to the full House for a vote.

Lawmakers push CLARITY Act forward amid GENIUS Act uncertainty

Support for the CLARITY Act is building. That’s celebrated as a boon by crypto businesses, developers, and investors.

But there’s a catch: the bill’s future could rely on the fate of another piece of legislation making its way through the Senate — the GENIUS Act.

The GENIUS Act aims for stablecoins, several types of crypto that track things in the real world — like the US dollar. The crypto economies rely heavily on stablecoins, the gas on which many digital assets famously ride.

The Senate made major progress on June 4 when it took a key procedural vote on the GENIUS Act. The vote was strong and bipartisan — 66 in favor to 32 against. This provides evidence that legislators of both stripes understand the need for new financial rules in an era increasingly dominated by blockchain.

The GENIUS Act would impose tight regulations on stablecoin issuers, such as full asset backing and periodic disclosures of reserves. Lawmakers argue that this will foster trust from the public and ultimately allow innovation to persist.

Because stablecoins are so integral to the digital asset economy, many believe the GENIUS Act must pass before the CLARITY Act can effectively go to work. If the GENIUS Act flounders in the Senate, it would sap momentum for the CLARITY Act in the House.

Crypto advocates push to influence CLARITY Act language 

With the markup date approaching, crypto advocates are fighting to shape the language that will be included in the final iteration of the CLARITY Act.

Eight industry groups have banded together to advocate for language in the bill featuring the Blockchain Regulatory Certainty Act, another proposal that would shield DeFi developers — those who code up decentralized financial platforms but don’t hold user funds.

They argue they should not be treated like banks or financial institutions because they do not hold assets. Without these protections, developers fear being saddled with regulations designed for completely different businesses.

They also fear conflicts of interest in the legislative process. Yet some warned that clear ethical guidelines needed to be established, or there would be public distrust.

There have been suggestions to prohibit federal officials from owning or advocating for cryptocurrencies in office. These are thought necessary to ensure a level playing field for regulating virtual assets and to prevent corruption.

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