Bitcoin rips as CLARITY Act clears major Senate Committee hurdle, advances to the full Senate floor

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Bitcoin surged back above $81,000 after the Senate Banking Committee voted to advance the Digital Asset Market CLARITY Act, clearing a major hurdle for the most comprehensive crypto regulation bill in US history.

On May 14, the panel approved the legislation on bipartisan lines, sending the legislation to the full Senate floor. The successful markup caps ten months of painstaking negotiations and represents a monumental shift toward establishing a clear federal framework for digital assets.

Patrick Witt, the executive director of the White House Presidential Advisory Committee on Digital Assets, said:

“The CLARITY Act is not only good policy, it is necessary policy for the United States to maintain our leadership position in global financial markets. Not to mention the robust consumer protections and anti-illicit finance provisions it contains, without which, there are none.”

CLARITY Act’s path to passage

The CLARITY Act aims to resolve a decade-long turf war between federal regulators by explicitly dividing jurisdiction over digital asset markets.

Under the newly approved text, the Commodity Futures Trading Commission (CFTC) is granted sweeping authority to regulate crypto spot markets, while the Securities and Exchange Commission (SEC) retains oversight over digital asset securities and primary offerings of investment contracts.

The road to passage narrowly survived a last-minute push from traditional banking stakeholders, including the American Bankers Association and the Bank Policy Institute.

Bankers had lobbied heavily against the rewards provisions on stablecoins, warning that the bill could trigger “deposit flight” from traditional financial institutions.

To secure the necessary bipartisan votes, lawmakers relied on a delicate compromise regarding stablecoin rewards.

The approved text explicitly bans platforms from offering passive yield on idle stablecoin balances, which was a major victory for the traditional banking sector. However, it permits “activity-based rewards” tied to direct platform transactions, such as gas fees or utility payments.

Still, the legislation drew sharp criticism from some progressive lawmakers, like Senator Elizabeth Warren, who said:

“[CLARITY Act] will turbocharge the massive conflict of interests posed by Donald Trump and his family’s crypto ventures.”

Conversely, crypto advocates celebrated the markup as a defining victory that would bolster the industry’s growth. Coinbase CEO Brian Armstrong said the legislation will benefit the American people by making the US financial system faster, cheaper, and more accessible.

He added that the CLARITY Act “will also ensure that the US leads in the global race to build the next generation of our financial system.”