Senate fails to advance Clarity Act amid Democratic concerns about crypto bill

Washington — The Senate on Tuesday failed to advance a sweeping cryptocurrency bill known as the Clarity Act, amid opposition from Democrats and a handful of Republicans.

In a 49 to 50 vote, the measure fell short of the 60 votes needed to move forward, with all Democrats and four Republicans opposing.

The bill would establish a regulatory framework for digital assets. Ahead of the vote on Tuesday, Senate Majority Leader John Thune argued passing it would be the "next logical step" after Congress approved legislation last year to regulate a type of digital currency known as stablecoins. Thune said that landmark bill, known as the Genius Act, provided a "light-touch approach" to digital asset regulation, and credited it for the industry "moving in the right direction" in the United States.

Thune, a South Dakota Republican, noted that the Clarity Act distinguishes between the jurisdictions of the Commodity Futures Trading Commission and the Securities and Exchange Commission, two financial regulators that have split crypto enforcement in sometimes confusing ways, while ensuring that they work together to "harmonize the rules." He also touted that the bill "ensures that companies can't skirt securities laws that apply to other financial assets." And he argued that it "protects the growing number of Americans investing in and utilizing digital assets."

Thune touted the bill's support from large financial institutions and law enforcement organizations, while nodding to bipartisan backing as senators have worked for more than a year to bring it to the floor. Thune cited more than 100 changes made to the bill at the request of Democrats, noting that the bill's GOP sponsors released a final draft with more changes incorporated over the weekend. He said "the question now is whether Democrats will take yes for an answer."

"This is a shared priority, for Republicans, Democrats and President Trump," Thune said. "We've been working at it now for over a year. The only reason for this progress to end now would be if the Democrats choose politics over good policy. And now is not the time for political games."

But the changes weren't enough for Democrats. Sen. Elizabeth Warren of Massachusetts voiced opposition to the bill on the Senate floor ahead of the vote, saying she believes "we can get crypto legislation that both Republicans and Democrats can agree on — but not this bill. "

"This bill poses a massive risk to families, to our economy and to national security," Warren said. 

Warren said "we need crypto legislation that stops political self-dealing," but she argued that the Clarity Act "would turbocharge Donald Trump's unprecedented corruption." She claimed "no one has more to gain personally from this bill than the president of the United States."

At the center of the impasse is ethics language aimed at preventing officials from profiting off of the industry. But Democrats have argued that the latest changes to the bill don't go far enough to prevent the president and his family from profiting off of their own crypto ventures.

According to financial disclosures, Mr. Trump made $1.4 billion in crypto-related income last year, including from his meme coin business and his family's cryptocurrency firm.

Warren said in the latest version of the legislation, which the White House has greenlighted, Republicans included "a tiny little fig leaf that claims they're doing something about corruption, but that is carefully written to make sure that it will not prevent Donald Trump from making his next $1.4 billion in crypto profits." She argued that the new text guarantees Mr. Trump will "never, ever be held accountable under the law."

Warren urged her GOP colleagues to come to the table and "negotiate a real, bipartisan crypto bill."