CLARITY Act risks 4-year delay, says Lummis amid Senate inaction

US Senator Cynthia Lummis is warning that the long-anticipated CLARITY Act could be delayed for years if the Senate fails to act before the 2026 election cycle, raising pressure on lawmakers to finalize a landmark crypto market structure bill.

Lummis, a leading Republican voice on digital asset policy, has cautioned that failure to advance the legislation during the current congressional window could push comprehensive crypto regulation into a prolonged stall lasting up to four years, effectively freezing reform efforts until the next political cycle.

Over the past few weeks, several officials have also advocated for a similar urgency in the bill’s deliberations and passing. Treasury Secretary Scott Bessent just wrote an op-ed in the Wall Street Journal arguing that establishing federal regulations for digital assets is key to attracting and retaining crypto investors in the US.

The Senator’s warning comes as negotiations over the bill continue to intensify in Washington, with key disagreements still centered on regulatory jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), as well as provisions governing stablecoin rewards and decentralized finance (DeFi) activity.

Senator Lummis’ post elicited multiple reactions

On X, Senator Lummis wrote, “This is our last chance to pass the Clarity Act until at least 2030. We can’t afford to surrender America’s financial future.”

Her post naturally provoked different reactions from the crypto community. Some X users were confused about why things might be frozen for four years, others questioned what the actual holdup on the bill is, while others resorted to blaming banks and their lobbyists for pushing back negotiations.

One commenter even expressed disappointment with the bill’s approval delay, saying, “The whole world is adopting crypto, digital currencies, we are behind on this one big time.”

Another supporter of the legislation noted, “When the US sets the rules, the whole world adjusts. Clarity Act isn’t just an American story; it’s the global crypto framework in disguise.”

Ideally, Lummis’ warning feels even more urgent, given that she admitted a few months ago that she isn’t running for reelection. She noted that another demanding six-year stint is just too much to take on physically and mentally.

Previously, some analysts had also warned that if Congress doesn’t act soon, the bill could easily be dead in the water until at least 2027, as everyone’s focus shifts to the upcoming midterm elections. Nonetheless, bettors on prediction markets think there is a 56% chance that Trump will sign the CLARITY Act into law by the end of this year.

Before Lummis raised her concerns, Treasury Secretary Scott Bessent and several of President Donald Trump’s close advisors were already making the case that Congress needs to act right away. According to Bessent, the lack of clear regulations in the US has already pushed much of the crypto innovation overseas to business-friendly hubs like Singapore and Abu Dhabi. 

The White House CEA says the CLARITY Act may not be that harmful to banks as they claim

The major dispute over the CLARITY Act is over its provisions on stablecoin rewards.  The bill aims to ban passive yield or interest paid solely for holding stablecoins, but permits activity-based rewards.

Traditional financial institutions still contend that offering yield on stablecoins will drain bank deposits and hurt lending capacity, a claim the crypto industry refutes, pointing to a distinct lack of supporting evidence. A recent report from the White House Council of Economic Advisers, however, suggested that a ban on stablecoins yields would do very little to curb deposit flight, suggesting that the banking industry’s alarm may be exaggerated.

The report showed that eliminating the yield would boost bank lending by only $2.1 billion, or just 0.02% of all loans. On top of that, it would cause about an $800 million net loss, meaning regular consumers would end up paying more than the banking system actually gains. It noted that even community bank lending would only increase by $129 billion, a 6.7% increase. 

As earlier reported by Cryptopolitan, Coinbase’s Chief Policy Officer, Faryar Shirzad, also argued that stablecoin yield could open the door for big and small banks to use this tech for processing payments and offering new services.

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