Senate Democrats are pushing a vertical-integration provision in the CLARITY Act that Republicans and crypto industry groups oppose, threatening next week's cloture vote. Negotiators also remain split on an ethics provision and a stablecoin yield rule, while a prediction market gives the bill just a 17% chance of becoming law this year.
The CLARITY Act has hit a new snag ahead of next week's cloture vote, as Democrats and Republicans clash over adding a vertical-integration provision to the crypto bill. The vote would begin the process toward passing the legislation.
Democrats Push New Conflict-of-Interest Standard
According to a Politico report, Democrats want the bill to direct regulators to set new standards for vertically integrated crypto companies to avoid conflicts of interest. These senators argue the provision resembles language Republicans supported when they advanced the bill earlier this year.
GOP senators back including conflict-of-interest standards in the CLARITY Act, but they warn that a future Democratic president could weaponize a vertical-integration rule. Crypto industry stakeholders have pushed back against the provision as well. Vertical integration means a company controls multiple stages of its supply chain — in crypto, that resembles FTX, which ran an exchange while operating as a market maker through its Alameda Research affiliate.
Talks Continue as Other Provisions Stay Unresolved
Lawmakers have yet to agree on a bipartisan ethics provision, and banks continue to lobby against a stablecoin yield provision in the bill. Treasury Secretary Scott Bessent has urged senators to pass the CLARITY Act or risk the United States losing its crypto leadership.
Democratic Senator Cory Booker and Republican Senators Cynthia Lummis and Agriculture Chair John Boozman are negotiating the vertical-integration language. Booker said the two sides have "shared values" in the fight, signaling progress in the talks. However, he added that he will not support the CLARITY Act unless it protects consumers from the potential downsides of a Web 3.0.
Odds Favor a Delay Beyond This Year
With several issues still unresolved, the crypto industry may be resigning itself to the possibility that next week's cloture vote fails. Coinbase CEO Brian Armstrong has said crypto will get regulatory clarity even if the bill fails its Senate test.
A final vote may not happen until the lame-duck session after the midterm elections, even if the cloture vote passes, because the House has canceled its late-September sessions and will start an early recess after the first half of this month. Data from Polymarket shows only a 17% chance that President Trump signs the CLARITY Act into law this year.
Source: CoinGape
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