Republican lawmakers assert that the CLARITY Act focuses on protecting investors, while Coinbase and Galaxy Digital express concerns about government oversight and stablecoin rewards.
Republican senators on the U.S. Senate Banking Committee have released a document refuting criticism that the digital asset market structure bill is designed to serve the interests of the cryptocurrency industry. According to the announcement on Tuesday, lawmakers led by Senator Tim Scott assert that the CLARITY Act focuses on protecting investors rather than meeting the demands of businesses.
Republicans, who currently hold a majority in Congress, emphasize that the bill was shaped by years of bipartisan work and extensive engagement with regulators and law enforcement. They argue that the bill strengthens national security, protects investors, and ensures innovation takes place within a framework of clear and enforceable rules. However, this view faces strong opposition from both industry and some Democratic lawmakers.
Concerns from the cryptocurrency industry
Ahead of Thursday's scheduled XEM and amendment session at the Senate Banking Committee, leading cryptocurrency firms have voiced concerns. Galaxy Digital, in a research note published Tuesday, warned that the bill could expand the government's ability to monitor and enforce regulations against cryptocurrency users. Coinbase also threatened to withdraw its support if the stablecoin reward provisions are not handled adequately.
Coinbase's chief policy officer, Faryar Shirzad, said in an interview with CNBC on Wednesday that the draft bill contains several provisions that are of great concern to the company. In particular, there is a section that could prevent the Securities and Exchange Commission (SEC) from allowing the Tokenize of the stock market, a development many businesses are hoping for.
The revised draft, released on Monday, suggests a compromise approach by banning passive yields on stablecoin balances but not entirely prohibiting reward payments. However, it remains unclear whether this version will pass the committee or the Senate floor if the bill is brought to a vote.
The bill's XEM process has been delayed since last year due to concerns related to ethical hurdles and decentralized finance, along with the longest US government shutdown in history. Thursday's markup will show the level of support for the amendments proposed by Democratic and Republican lawmakers, as well as the likelihood of these amendments being formally added to the bill.
In parallel with the Banking Committee's work, Republican senators controlling the Senate Agriculture Committee announced they will release a draft bill on January 21 and hold a markup hearing on January 27. Both committees are expected to address different aspects of the bill, including how financial agencies such as the SEC and the Commodity Futures Trading Commission (CFTC) will conduct regulation and enforcement.
