As US senators launched the long-awaited hearing convened to advance legislation on the crypto market structure, they admitted that there was still a rift between Republicans and Democrats on the latest version of the Digital Asset Market Clarity Act.
Thursday’s Senate Banking Committee hearing, known as a “markup” hearing to weigh dozens of amendments to revise and revise the bill’s language, represents a key moment in the process of moving this policy effort past a longstanding roadblock. Republican senators may be the only supporters at the moment, but the ultimate goal is to end up with a bipartisan version that can pass the full Senate with enough Democratic support.
Members of the committee began their session with a nod to difficult, bipartisan talks that apparently still led to an impasse Thursday on the latest version of the legislation.
“We’re going to disagree on this today, but I hope what we end up with is a legislative product that’s good now and gets another bite at the apple as it goes to the floor,” said Speaker Tim Scott. “This is not over, and I hope nobody thinks this is over. This process has been transparent. It’s been tough and it’s been clear, and that’s good news for the American people who are following this process.”
Lawmakers and their staff tried to iron out remaining issues, including the bill’s treatment of decentralized finance (DeFi) and a major government ethics provision to keep senior officials out of the crypto industry. If the bill passes along party lines at the end of the hearing, 13-11, it will still move on to the next steps, including merging with a similar bill that has already passed the Senate Agriculture Committee.
“This is by far the toughest piece of legislation I’ve ever worked on,” said Sen. Cynthia Lummis, a Wyoming Republican who chairs the panel’s digital assets subcommittee. She noted that it is a “case of first impressions” and seeks to address new innovations. Lummis said the lawmakers who negotiated the bill will continue to work on “the 1% of remaining issues that were not realized until today, despite our around-the-clock negotiations.”
A fundamental disconnect was evident at the hearing because the most senior Democrats—including Ranking Member Elizabeth Warren—were the most vocal critics of the legislation, while the many Democrats who actively participated in the negotiations with Republicans were not involved in the opening remarks.
“This bill is just not ready for prime time,” Warren said. “First, the bill before us would blow a hole in our securities laws that have protected investors since 1929. Most Americans do not want their pensions at risk so that a few crypto-billionaires can juice their own profits. Second, this bill declares open season on defrauding American consumers using crypto.”
Democrats objected to many amendments that were scrapped on procedural grounds before the hearing began, although Scott argued that the procedural dispute began with Democrats targeting a Republican amendment.
The hearing began knocking down most of the Democratic amendments one by one along partisan lines, with lawmakers briefly making their cases for each. The partisan appointment was reminiscent of the similar markup earlier this year in the agriculture panel, although some provisions got successful votes on Thursday, such as an amendment regarding the expansion of government protection involving the practice of calculating margin across portfolios.
While Democrats continued to express opposition to the Clarity Act’s language, arguing that it had not answered significant questions about illegal financing and consumer protection, Republicans argued that much of the bill addresses those concerns—which currently have no federal protections—for the first time.
Senator Thom Tillis, the Republican who helped lead negotiations over a long-standing sticking point involving dividends on stablecoins, countered that “the status quo, frankly, is unacceptable.”
Read more: Clarity Act, in the flesh, unveiled by US Senate Banking Committee ahead of hearing
