Several weeks ago, most experts believed the Clarity Act faced an uphill battle for passage after the U.S. Senate failed to hold a vote on the crypto legislation before its August recess.
That’s because there is very little time once the Senate returns in September before it breaks again in early October for the midterm elections.
However, after some pressure from President Donald Trump, a cloture vote will move forward on Sept. 15, the day after Senators return from the August recess.
The cloture vote would not formally pass the bill, but would end debate and filibuster, paving the way for a formal vote. The cloture vote would require 60 votes to pass, the same number required to ultimately pass the bill, so it could be a strong indication of where things stand.
The fact that a date has been set adds real momentum to the legislation, and Coinbase CEO Brian Armstrong now thinks the Clarity Act will pass, which would be very bullish for Bitcoin (BTC +6.65%).
Image source: Getty Images.
Passage of the Clarity Act could be just what Bitcoin needs
It has been a bleak crypto winter for all cryptocurrencies, including Bitcoin, the world’s largest. Even after a 22% rally over the past five days, Bitcoin is still down 12% on the year.
News about the Clarity Act vote is likely responsible for today’s rally. The Clarity Act is a sweeping bill that would establish a broader regulatory framework for crypto and, hopefully, clarify regulatory gray areas.
The bill defines what a “mature blockchain” is and helps decipher who has regulatory jurisdiction over certain cryptocurrencies, which has been a major gray area.
Both the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have, at times, claimed jurisdiction over certain crypto markets.
Crypto advocates would prefer that cryptocurrencies not be classified as traditional securities, which are subject to much more stringent regulation.
Today’s Change
(6.65%) $4,841.41
Current Price
$77,594.00
Key Data Points
Market Cap
Day’s Range
$72341.00 – $79320.00
52wk Range
$57945.16 – $126079.89
Volume
68B
The Clarity Act would give the CFTC exclusive jurisdiction over the spot markets of “digital commodities.” Furthermore, the Clarity Act contains key language regarding stablecoins and the rewards they can offer customers, a controversial issue.
The proposed bill would not allow idle stablecoins to earn yield, which banking industry stakeholders have claimed could lead to significant deposit outflows from the traditional banking system. However, stablecoins could issue rewards for certain activities, such as transactions, similar to credit card reward points.
One of the reasons Bitcoin performed so well shortly after President Donald Trump won the 2024 election is that Trump promised to make the U.S. the crypto capital of the world, in part by establishing regulations that would allow the crypto sector to progress.
The passage of the Clarity Act would allow mainstream financial institutions, businesses, and consumers to engage with crypto with greater certainty and less fear of retribution.
Will it pass?
The bill requires 60 affirmative votes in the Senate for passage. Armstrong, a clear advocate for the bill, recently told CNBC he believes passage is likely.
“He (Sen. Majority Leader John Thune) would not have scheduled this on Sept. 15 if he didn’t think it would pass,” Armstrong said. “I’m pretty optimistic it will get over 60 votes, and I think both sides got 90% or so of what they want.”
The odds on Kalshi are less optimistic, with 22% of people betting that the bill gets over 60 votes.
There are 53 Republicans, so seven Democrats would need to support the bill. Democrats have been reluctant to support the bill, calling for additional ethics provisions on how much politicians can invest in crypto entities, particularly after Trump reported massive crypto profits last year.
Banking groups have also expressed concern that the stablecoin legislation doesn’t go far enough to protect the banking industry, so the Clarity Act does not appear to be a done deal. But the bill’s fate will certainly become much clearer on Sept. 15.
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