Key Takeaways
- Senate Democrats rejected the latest CLARITY draft over weak ethics rules, tumbling its passage odds to 18%.
- State attorneys general rejected the bill, warning it limits their authority to protect investors from fraud.
- GOP doubts over bank deposits and bill complexity threaten passage ahead of Tuesday’s 60-vote cloture hurdle.
Senate Democrats to Introduce CLARITY Act Counteroffer
The future of the Digital Asset Market Clarity Act, known as the CLARITY Act, remains uncertain as Democrats prepare to issue a counteroffer to a draft introduced by Senate Republicans on Sunday night.
The proposal comes after Senate Democrats, who are working on the bill, met with Minority Leader Chuck Schumer on Monday evening to decide what to do after receiving the CLARITY draft bill, which contains over 126 changes requested by Democrats. The draft includes new ethics language that encompasses a ban on crypto issuance for covered individuals and divestment of existing crypto investments.
Senator Mark Warner stressed that Democrats who have worked on the CLARITY Act in good faith will prepare this counteroffer. Warner publicly expressed his dissatisfaction with the current ethics rules, saying that for him, the ethics provision was not “near enough”
“It’s frustrating because we’ve had these same three issues outstanding for six, eight weeks, and why this couldn’t have been dealt with earlier? I’m really concerned,” he told Semafor.
Senator Raphael Warnock, who also believes the bill, as drafted by Republicans, did not deal with “opportunities for corruption,” told Politico that Senate Republicans would get the bill on Monday night, and that their answer would determine “if they’re serious about a viable path.”
But even in the Republican aisle, doubts remain about passing the CLARITY Act due to its complexity. “It’s more than 600 pages, with a new ethics provision in it, and other provisions that I need to look at, such as whether it would cause community banks to lose deposits,” Senator Susan Collins assessed.
A coalition of state attorneys general, led by New York AG Letitia James, torpedoed the CLARITY Act on Monday, declaring that the new draft would limit their authority to protect state crypto investors from fraud.
Senate Democrats’ rejection of the CLARITY Act’s so-called final draft tumbled its odds of being signed into law this year, with prediction market platforms like Polymarket estimating just an 18% chance of it passing at the time of writing.
The cloture vote on the CLARITY Act will happen on Tuesday evening, and it requires 60 Senators to vote for a final consideration of the proposed draft.
