A group of bipartisan state attorneys general is wading into the Clarity Act debate as the Senate prepares for an upcoming procedural vote on the controversial crypto market structure legislation.
U.S. Senate Banking Digital Assets Subcommittee Chair Cynthia Lummis (R-WY) released the latest version of the Clarity Act on Sunday, outlining “126 Democrat wins” she says were successfully negotiated by her rival party.
Among those “wins” is a ban on federal elected officials, senior executive branch employees and federal judges from issuing or sponsoring a digital asset or maintaining a significant financial interest in an issuer of crypto assets.
That potential regulation is a direct shot at President Donald Trump’s controversial “TRUMP” memecoin, but Lummis notes that Trump himself signed off on the new language.
The new version hasn’t won over all detractors, however: On Monday, a group of attorneys general from 17 states and the District of Columbia penned a letter to Senate Banking Committee Chairman Tim Scott (R-South Carolina) arguing the current iteration of the bill doesn’t do enough to protect crypto investors from scams and fraud.
“While the current draft of the CLARITY Act reserves certain powers for states to prosecute fraud, the language is often ambiguous, unclear, or confined in ways that either create the opportunity to challenge state police powers or outright deprive the states of their ability to continue to combat the scam epidemic. Even though states will prevail in enforcing laws that are not preempted, the benefit of litigation and delay caused by ambiguity accrues to bad actors.”
The bill would largely place the digital assets under the regulatory purview of the Commodity Futures Trading Commission (CFTC), an agency industry stakeholders believe is friendlier to the sector than the Securities and Exchange Commission (SEC).
The potential legislation has faced opposition from traditional financial giants and banking associations, who have argued the bill could put financial stability at risk and cause bank deposits to lose ground to stablecoins.
A procedural vote on the Clarity Act is scheduled for Tuesday; it requires 60 votes and would allow the Senate to debate and consider the legislation in an actual vote.
Polymarket bettors’ confidence in the Clarity Act’s chances of passing this year has mildly improved this week, with its odds jumping from 17% seven days ago to 26% at time of writing.
Follow us on X, Facebook and Telegram
Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Featured Image: Shutterstock/Tithi Luadthong/Natalia Siiatovskaia