On May 12, 2026, the U.S. Senate Banking Committee released an alternative text of the 309-page “Digital Assets Clarity Act.” Compared with the earlier 278-page version from January, this updated draft covers the results of the game-theory outcomes from multiple rounds of negotiations throughout the spring. The core logic of the bill is to end the SEC vs. CFTC jurisdiction dispute that has dragged on for years, and to establish a predictable digital asset classification framework.
Under the “mature blockchain” standard—high decentralization, with no single party controlling—the bill splits digital assets into two categories: securities and commodities. The former is regulated by the SEC, while the latter falls under the CFTC. Notably, the draft includes a key clause: the SEC may not reclassify assets from U.S.-listed Spot Trading exchange-traded products (ETFs) that existed before January 1, 2026 as securities. In effect, this permanently excludes Bitcoin and Ethereum from the securities category. In addition, the bill sets up a “de-securitization” certification pathway: once the issuer submits proof, if the SEC does not raise objections within 60 days, the certification automatically takes effect.
The bill also clarifies the regulatory boundary for DeFi, and includes a protection clause for non-custodial software developers based on the “Blockchain Regulatory Certainty Act,” ensuring that innovation in underlying blockchain technology is not stifled by overly strict financial regulation.
What does over 100 amendments mean?
Before the May 14, 2026 markup hearing opened for consideration, the Senate Banking Committee had received more than 100 amendments, marking the most amendments ever recorded for the committee in its history ahead of a legislative vote. The number easily triggers market worries that the bill could be “amended to death,” but the actual bargaining is far from that simple.
Among the more than 100 amendments, the vast majority came from Democratic Senators Elizabeth Warren and Jack Reed, and analysts characterized them as “wish lists” rather than seriously intended passable proposals. Because Republicans hold a 13-to-11 majority on the committee, Chair Tim Scott is able to control the order of amendment review and systematically reject most Democratic amendments. The real contest is concentrated in three key battlegrounds: whether to keep the word “solely” in the stablecoin interest provisions, how the ethics provisions are incorporated, and the scope definition of the blockchain developer exemption provisions.
The outcomes of these three battlegrounds will directly determine the compliance costs and the room for survival of business models for major players across the crypto industry. Senator John Kennedy (Republican, Louisiana) is viewed by market analysts as the only uncertain factor that could affect the final voting result, with his stance mainly tied to non-crypto issues such as housing policy.
Why has the stablecoin interest provision become the core controversy?
Although the bill covers many aspects, including asset classification, jurisdictional splits, and investor protection, the dispute with the most far-reaching impact is concentrated on stablecoins and the yield they generate. At its core, this is an interests contest between the banking industry and the crypto industry.
Section 404 of the bill prohibits intermediaries from freely distributing passive interest on stablecoins that users hold idle, and it locks compliant stablecoins within a framework of tightly regulated reserves. After months of negotiation, a compromise put forward by Senators Thom Tillis and Angela Alsobrooks clearly distinguishes two types of yields: passive interest or gains that are prohibited if they are paid “solely” due to holding stablecoins, but it allows “use-directed rewards” tied to real business activities (trading, staking, payments, etc.). The practical effect of this approach is that holding stablecoins itself cannot generate interest, but users’ on-chain usage incentives would not be restricted.
However, five major banking groups—including the American Bankers Association and the Center for American Bank Policy—issued a joint statement rejecting the compromise. Bank representatives warned that yield-bearing stablecoins could reduce consumer, small business, and agricultural lending by more than one-fifth, undermining the stability of the traditional credit system. Rob Nichols, CEO of the American Bankers Association, even called on bank leaders nationwide to intervene in the legislative battle through a public letter, citing a Treasury Department report saying the provision could trigger as much as $6.6 trillion in deposit outflows.
Senator Cynthia Lummis commented that the bill is the result of months of negotiations, while Tillis said bluntly that some traditional financial institutions might simply not be willing to accept any version of the “CLARITY Act,” using the yield-rate controversy to obstruct the legislation itself.
How to interpret the 65%–75% approval probability from prediction markets?
Polymarket, the prediction platform, priced the probability of the CLARITY Act becoming law in 2026 and has seen sharp fluctuations over the past few months. The probability bottomed around 40% in January, then climbed to an intra-year high of 82% in February, fell back to 43% thereafter, and as of shortly before the markup, rebounded to the roughly 65%–75% range. On a daily basis, data shows the latest probability that the bill will be signed into law is about 64%. As of May 14, the prediction market’s cumulative trading volume had reached about $651,800, reflecting the market participants’ high level of attention to the legislative process.
The shape of the probability curve is highly correlated with substantive negotiation progress. The early-year low corresponds to a situation where Coinbase withdrew its support, causing the committee vote to be delayed. The February peak coincided with initial agreement on a stablecoin yield compromise framework. The sharp pullback in April reflects Democrats’ hardline stance on ethics provisions. And the recent rebound back into the 65%–75% band is mainly driven by the committee confirming the markup date and a substantive breakthrough on the stablecoin yield provisions.
The logic behind price volatility is that prediction market pricing reflects the dynamic equilibrium of bargaining among all interest parties, not that a consensus has already been reached. Once the cards are on the table, the marginal increase in information for the market diminishes, and pricing enters a narrow band of oscillation. Another implication of this pricing pattern is that the market believes the committee’s passage probability is relatively high, but the follow-on full Senate vote still needs to clear a 60-vote threshold, and Democrats’ stance on ethics provisions creates a downside risk that cannot be ignored.
The White House has set July 4 (the 250th anniversary of U.S. independence) as the target date for the President to sign. Senator Gillibrand predicts that the final vote could be completed in the first week of August.
How do the bargaining between traditional finance and the crypto industry affect the bill’s shape?
The legislative process of the CLARITY Act is not only about building a technical regulatory framework, but also a structural contest between old and new financial forces. The degree of banking groups’ resistance shows clear layers across different stages: the earliest phase was a full opposition to stablecoin interest-bearing functionality; the current phase is a refusal of the Tillis-Alsobrooks compromise; and if the bill advances to the stage of a full Senate vote, more compliance cost provisions may be added later.
The crypto industry’s stance is also not monolithic. Coinbase withdrew its support for the bill in January 2026, then later returned to a supportive stance. a16z Crypto managing partner Chris Dixon emphasized that “crypto builders need clear rules for the road,” but there are still disagreements within the industry over the specific regulatory provisions. The existence of such disagreements objectively weakens the crypto industry’s cohesion in bargaining against the banking groups.
Support from major institutions provides weighty backing for the legislation. Fidelity said the bill provides a balanced regulatory framework; if passed, it would benefit U.S. investors and ensure the U.S. remains a leader in the global digital assets arena. Ripple executives publicly supported the CLARITY Act on the eve of the markup, calling it a key legislative moment. Grayscale research head Zach Pandl said the bill can catalyze the next phase of digital asset innovation and capital formation, replacing long-term uncertainty with a regulatory framework that developers, enterprises, and investors can expect.
How do the next legislative steps and the 60-vote threshold determine the bill’s fate?
Even if the Senate Banking Committee marks up and passes the bill on May 14, the path ahead will still be long and full of uncertainty. After the committee passes the bill, it must first be merged with the version previously approved by the Senate Agriculture Committee. Second, it needs to incorporate the ethics provisions that are still under intense debate. Finally, in the full Senate vote, it must receive 60 votes in favor to pass.
The ethics provisions are the most consequential political variable right now. The 309-page draft does not include ethics restriction provisions targeting crypto holdings by government officials, because such matters are not within the jurisdiction of the Senate Banking Committee. Chair Scott’s strategy is to push this contest to the stage of merging with the Agriculture Committee, to avoid the bill being rejected at the committee stage due to strong White House opposition (the Trump family has substantial business interests in the crypto industry).
At the Consensus 2026 conference in Miami, Senator Gillibrand made it clear that if there are no ethics provisions, she would not be able to support the bill to obtain the votes it needs in the full Senate. A survey commissioned by CoinDesk and conducted by HarrisX shows that 73% of registered voters support such restrictions on government officials, giving Gillibrand political leverage in negotiations. After the text was published, Senator Elizabeth Warren directly criticized the bill for “putting investors, national security, and the entire financial system at risk,” and pointed the finger at the Trump family’s huge gains in the crypto space.
The time window is also a constraint that cannot be ignored. Senators Lummis and Bernie Moreno both issued warnings: if the committee misses the markup window before the May 21 adjournment for Memorial Day, the remaining agenda for this Congress will be extremely tight. If the bill cannot be advanced in time, it could require waiting until 2030 for a chance to restart such comprehensive crypto legislation, because a new Congress would reset and restart the process from zero.
Frequently asked questions
How far along is the CLARITY Act in review?
The bill entered the Senate Banking Committee markup stage on May 14, 2026. The committee meeting agenda includes discussion and votes on more than 100 amendments. If it passes, the bill will move to a full Senate vote.
What conditions are needed for the bill to pass?
The bill must win 60 votes in the full Senate vote to clear the lengthy debate obstacle (filibuster), and then it can pass by a simple majority. Currently, Republicans control only 52 seats, so at least 8 Democratic senators must cross party lines in support. In addition, it needs to be merged with the Senate Agriculture Committee version and resolve the ethics provision controversy.
What exactly does the stablecoin interest provision include?
The Tillis-Alsobrooks compromise prohibits paying interest or yield “solely” because someone holds stablecoins, but it allows incentive mechanisms tied to real business activities (such as trading, staking, or payment use). The goal of this方案 is to balance business flexibility for the crypto industry with regulatory concerns from traditional banks.
Why does the prediction market price the approval probability at 65%–75%?
The probability range reflects the following factors: the bill has a high chance of committee passage (due to the Republicans’ seat advantage); uncertainty exists because the full Senate vote has a 60-vote threshold; the controversy over ethics provisions could delay the legislation; and missing the May window would severely obstruct the agenda.
What does the bill mean for Bitcoin and Ethereum?
The draft bill clearly prohibits the SEC from classifying the assets of Spot Trading ETFs that already existed before January 1, 2026 as securities. Bitcoin and Ethereum are therefore permanently excluded from the securities regulatory framework, without future risk of regulatory classification changes.
What protection does the bill provide to DeFi developers?
The bill retains developer protection provisions consistent with the “Blockchain Regulatory Certainty Act,” explicitly stating that non-custodial software developers who do not control users’ funds should not be classified as funds transferors, thereby exempting them from strict financial compliance obligations.
