As U.S. senators launch long-awaited hearings calling for the advancement of cryptocurrency market structure legislation, they acknowledge that differences remain between Republicans and Democrats over the latest version of the Digital Asset Market Clarity Act.
Thursday’s hearing before the Senate Banking Committee, known as a “mark-up” hearing to weigh dozens of amendments to revise and overhaul the bill’s language, was a critical moment in the process of pushing the policy toward overcoming longstanding hurdles. Republican senators may be the only backers for now, but the ultimate goal is to reach a bipartisan version that passes the full Senate with full Democratic support.
Committee members acknowledged difficult bipartisan negotiations at the start of the session, with the latest version of the legislation appearing to remain deadlocked Thursday.
“We’re going to have differing opinions on this today, but I hope what we end up with is a legislative product that’s good now and takes another bite out of the apple when it falls,” said Chairman Tim Scott. “This is not over, and I hope no one thinks this is over. The process is transparent. It’s tough, but it’s clear, and that’s good news for the American people who are watching this.”
As of press time, lawmakers and their staff were trying to address remaining issues, including the bill’s treatment of decentralized finance (DeFi) and a major government ethics provision that prevents senior officials from participating in the cryptocurrency industry. If the bill passes along party lines at the end of the hearing (13-11), it will still advance to the next steps, including merging with a similar bill already passed by the Senate Agriculture Committee.
“This is by far the most difficult legislation I’ve ever been involved in,” said Sen. Cynthia Lummis, R-Wyo., who leads the group’s digital assets subcommittee. She noted that it was a “case of first impressions” and sought new innovations. Loomis said lawmakers negotiating the bill will remain committed to addressing “the remaining 1 percent that has not materialized by today despite our round-the-clock negotiations.”
A fundamental disconnect was evident at the hearing, as the most senior Democrats — including ranking member Elizabeth Warren — were among the most vocal critics of the legislation, while many Democrats active in negotiations with Republicans were absent from the opening remarks.
“This bill is not ready for prime time,” Warren said. “First, the draft before us would create a loophole in our securities laws that have protected investors since 1929. Most Americans don’t want their pensions to be put at risk so that a handful of cryptocurrency billionaires can squeeze their own profits. Second, this bill declares open season for defrauding American consumers who use cryptocurrencies.”
Democrats objected to many of the amendments that were struck down on procedural grounds before the hearings began, although Scott believes the procedural dispute began with Democrats targeting Republican amendments.
The hearing began with rejections of most of the Democratic amendments one by one along party lines, with lawmakers briefly laying out their reasons for each. The partisanship was reminiscent of similar hikes by the agriculture panel earlier this year, although some provisions were successfully voted on Thursday, such as an amendment to expand government protections to the practice of calculating portfolio margins.
While Democrats continue to express resistance to the CLARITY Act’s language and believe the bill doesn’t answer big questions about illicit finance and consumer protections, Republicans argue that much of the bill addresses these issues for the first time — issues that currently have no federal protections.
Republican Senator Thom Tillis, who helped lead negotiations on the long-thorny issue of stablecoin yields, countered that “the status quo is, frankly, unacceptable.”
Read more: US Senate Banking Committee releases substance of Clarity Act ahead of hearing