U.S. Senate CLARITY Act markup faces scrutiny over ethics and housing provisions

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Senate CLARITY Act ethics debate

Highlights

Senators Scott, Lummis, and Tillis unveiled new CLARITY Act draft that expands CFTC digital asset oversight and includes Build Now Act housing provisions.
Democrats threaten to oppose CLARITY Act on Senate floor without explicit ethics rules due to concerns over Trump-affiliated crypto interests and absence of conflict-prevention measures.
CLARITY Act faces a difficult Senate path, requiring 60 votes for passage despite recent bipartisan crypto support as seen in the GENIUS Act’s 68-30 June 2025 vote.

Banking Committee draft adds non-crypto elements

As reported by the U.S. Senate Banking Committee and Cointelegraph, Republican Senators Tim Scott, Cynthia Lummis and Thom Tillis on Monday unveiled the text to be used for considering whether to advance the crypto market structure legislation. The draft follows versions released in July and September 2025 and builds on discussions between crypto and banking industry representatives over stablecoin yield.

The latest text includes provisions that appear unrelated to digital asset market structure. In the final pages, the bill incorporates housing language under the Build Now Act, which a section-by-section summary says is intended to create a pilot program to incentivize housing development in certain Community Development Block Grant participating jurisdictions.

CLARITY is expected to expand the Commodity Futures Trading Commission's authority over digital assets, shifting oversight responsibilities often associated with the Securities and Exchange Commission. The measure has already advanced through the Senate Agriculture Committee in a January markup, but it still needs approval from the banking committee, the full Senate and reconciliation in the House of Representatives before it can be signed into law.

Ethics dispute clouds bipartisan path

Although Scott, Lummis and Tillis say the bill reflects continued negotiations with Democratic colleagues, some Democrats are warning they will not support market structure legislation on the Senate floor without explicit ethics provisions. Senator Angela Alsobrooks says she hopes lawmakers can reach a bipartisan markup on Thursday with a compromise on ethics.

The bill explicitly bars interest or yield on payment stablecoins, while allowing rewards or incentives tied to bona fide activities or transactions that are not economically or functionally equivalent to interest on an interest-bearing bank deposit. It also includes language from the Blockchain Regulatory Certainty Act, which is aimed at protecting developers from money transmitter requirements, a step welcomed by the DeFi Education Fund.

Democratic criticism is centering on the absence of ethics language linked to concerns over President Donald Trump's crypto business interests, including his memecoin and his family's World Liberty Financial venture. Senator Elizabeth Warren says the legislation increases risks for investors, national security and the financial system while containing no provisions to prevent conflicts tied to crypto-related gains.

The bill's path in the Senate remains challenging. Even if it advances out of the banking committee on Thursday, it would still require 60 votes in the full Senate, though lawmakers point to the 68-30 bipartisan passage of the GENIUS Act in June 2025 as evidence that cross-party support for crypto legislation is possible.

In our earlier article on the Senate Banking Committee’s upcoming markup of Republican-led crypto market structure legislation, we covered how the debate quickly shifted toward ethics and investor-protection concerns. We noted Senator Elizabeth Warren’s warning that the draft lacked provisions to address potential conflicts of interest linked to President Donald Trump and his family’s crypto ventures, a dispute that could complicate the bill’s path and public trust in federal crypto oversight.

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