Bipartisan efforts to advance the CLARITY Act, a major piece of digital asset legislation, stalled just before a crucial Senate Banking Committee vote. Negotiations collapsed late Wednesday after lawmakers failed to resolve final disagreements on ethics provisions and regulatory protections for blockchain developers, leaving the bill’s future uncertain.
Senator Lummis, a leading Republican negotiator, emphasized that nearly all of the bill’s content—more than 99%—had consensus. Yet, unresolved issues involving ethics clauses related to the First Family and changes linked to the Blockchain Regulatory Certainty Act (BRCA) blocked a deal. She warned that lawmakers risking failure over these last points would bear responsibility if another major crypto crisis comparable to the FTX collapse occurs.
The ethics concerns centered on provisions intended to address conflicts of interest involving the presidential family’s crypto holdings, a key demand by Democratic Senators Schiff and Gallego. Progress had been made to narrow this divide, with the differences appearing manageable before discussions broke down. However, a separate dispute arose over BRCA language designed to protect non-custodial software developers from being prosecuted under money transmitter laws. This protection is crucial for creators of decentralized tools who do not control user funds, and the industry views it as essential.
Democrats raised late objections to the BRCA clauses, halting any final agreement despite efforts to bridge divides. The negotiations represented the last significant chance for the bill to secure broad bipartisan backing prior to Thursday’s markup session. The vote will now determine if the CLARITY Act moves forward or stalls amid unresolved fractures.