Key Takeaways
- House Republicans broadly supported the CLARITY Act during a Financial Services Committee hearing on June 4.
- Democrats on the committee were much more critical of the legislation.
- Republicans may advance the CLARITY Act to the House floor when the committee votes on June 10.
Republican members of the House Financial Services Committee rallied behind the CLARITY Act, a proposed crypto market structure bill, on Wednesday, June 4, ahead of a markup vote scheduled for next week.
However, Democrats on the committee were far more skeptical of the bill and may be able to block its advance.
House Financial Services Committee Debates CLARITY Act
In a session titled “American Innovations and the Future of Digital Assets: From Blueprint to a Functional Framework,” Republicans on the Financial Services Committee broadly supported the CLARITY Act.
Representative Bryan George Steil argued the bill would “unleash innovation and ensure U.S. dominance in digital assets while protecting consumers from fraud.”
Meanwhile, Congressman Tom Emmer co-sponsored the CLARITY Act legislation, “a thoughtful bill that creates regulatory guardrails tailored to the unique attributes of blockchain technology.”
However, not everyone who spoke during the hearing supported the CLARITY Act.
Criticism of the Crypto Bill
Former Commodities and Futures Trading Commission (CFTC) Chairman Timothy Massad told committee members: “You need to go back to the drawing board.”
Instead of pursuing a “tortured rewriting of existing definitions of securities and commodities ” to define a broad class of digital assets as commodities, Masad suggested that the CFTC and the Securities and Exchange Commission (SEC) should work together to create rules for the crypto industry.
Similarly, Democrats on the committee depicted the CLARITY Act as an overly complicated bill that would leave vast swathes of the crypto sector unregulated.
House Democrats Critical of CLARITY Act
“The so-called CLARITY Act seems to be the latest agreement among the largest crypto companies on how they would like to be ineffectively regulated,” stated Representative Stephen F. Lynch of Massachusetts.
Representative Maxine Waters was equally critical.
“The bill doesn’t even deliver the clarity the industry has long sought,” she claimed. “Instead, the bill creates vague new definitions that will result in continued litigation and which the largest players, including big banks, will game at the expense of crypto startups.”
June 10 Vote Looms
According to the Financial Services Committee quorum rules, a simple majority is enough to send the bill to the House floor for debate.
If all Republican members attend the vote and back the progress of the CLARITY Act, they can override Democratic resistance.
However, Democrats may still use the opportunity to propose amendments to the bill.
One issue several Democrats raised on Wednesday was potential conflicts of interest arising from President Trump’s now sizable crypto empire, which spans meme coins, stablecoins, and beyond.
Concerns exist about the bill’s impact on the SEC’s regulatory authority.
By narrowing the definition of a security, critics of the CLARITY Act argue that it may have unintended consequences for the agency’s broader regulatory reach.
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