Since President Trump took office last year, the cryptocurrency industry has scored a series of political victories, avoiding lawsuits, negotiating trade policy and persuading the White House to create a national bitcoin reserve.
Now, the crypto world is focused on its most ambitious goal yet: passing a 309-page bill that would create a sweeping regulatory framework for digital currencies, shaped in part by the industry itself.
The banking committee of the Senate is to vote on the bill latest draft on Thursday, a major procedural step after the House passed a version of the legislation last summer. A successful committee vote would pave the way for the bill, known as the Clarity Act, to go to the Senate this year.
But his fate is far from certain. The legislation has proven highly contentious, pitting the crypto industry against a powerful banking lobby with huge stakes in the future of financial regulation.
Cryptocurrency leaders spent tens of millions of dollars to help elect sympathetic lawmakers in 2024, then flocked to Washington to defend the industry’s interests in Congress. The result is a bill that would make it easier for crypto firms to declare that digital currencies are not securities subject to the strict oversight system that applies to stocks and bonds on Wall Street.
During debates in Congress, Democrats expressed concern that the bill would gut the government’s enforcement powers in a fast-growing sector in which Mr. Trump’s family has become a major player.
“This bill threatens investors, our national security, and our entire financial system — and will strengthen Donald Trump’s crypto-corruption,” he said Sen. Elizabeth Warren of Massachusetts, the ranking Democrat on the Banking Committee, said in a statement this week.
The bill followed a winding path through Congress. A Senate committee was set to consider an earlier version in January, only for crypto exchange giant Coinbase to withdraw its support at the last minute, prompting lawmakers to cancel the vote. The company was concerned about the proposal, pushed by the banking industrywhich would outlaw one of its crypto products.
A series of negotiations brokered by the White House put the bill back on track, although banking trade groups did continued to express concernsaying the current language would allow for products that compete with traditional bank accounts.
In interviews, cryptocurrency officials said the bill is a major step toward making the United States more hospitable to the industry. If control of Congress changes in midterm elections this fall, it could be much harder for the industry to secure legislation.
This week’s vote is a “key window of opportunity,” said Summer Mersinger, CEO of the Blockchain Association, a crypto trade group.
The discussions in Washington cap years of lobbying and political spending in the crypto industry.
During the 2024 election, a network of crypto-funded political action committees spent more than $130 million to try to elect Democrats and Republicans who expressed support for the industry. Within months, Congress passed the GENIUS Act, which created industry-friendly rules for stablecoins, a type of digital currency designed to maintain a price of $1.
In July with the support of the administration and a vote of 294 to 134 the House he passed his version of the Clarity Act, which granted many of the industry’s wish-list items.
At the heart of the legislation are rules that would divide policing powers over cryptocurrencies between the Securities and Exchange Commission and the Commodity Futures Trading Commission, a smaller and less aggressive regulator.
The industry is pushing for a framework that would protect crypto companies from the onslaught of lawsuits and investigations that began during Mr. Trump’s first term and escalated under President Joseph R. Biden Jr. The goal of this enforcement effort, organized by the SEC, was to force crypto firms to disclose information to investors and submit to strict federal oversight of companies that issue shares.
Mr. Trump ended most enforcement last year, a change that disproportionately benefited companies that have donated to his political causes or established relationships with his family’s crypto businesses. Legislation could help cement this regulatory retreat by making it more difficult for a future administration to file comparable lawsuits.
“This will finally create that permanent framework,” said Cody Carbone, executive director of the Digital Chamber, a cryptocurrency trade group. “It’s going to be really hard for the next administration, whether it’s Republican or Democratic, to change too much.”
Senate Democrats expressed concern. they have pushed for ethics rules that would restrict elected officials from “issuing, endorsing or profiting” from cryptocurrencies, a response to the Trump family’s network of digital currency businesses. And wild debates erupted on arcane topics like decentralized finance and stablecoins with returns.
“We’re probably going to see more of a partisan vote,” said Kevin Wysocki, head of policy at Anchorage Digital, a crypto firm. “Actually, it’s quite normal to have some points that are more contentious and require a bit more time.
The law met with serious opposition in the Senate.
Ahead of an expected committee vote in January, banking groups pushed for a significant overhaul of the bill. They wanted to stop crypto exchanges from paying interest to people who own stablecoins, a service offered by Coinbase. Banks were worried that customers would empty their deposit accounts and switch to stablecoins, a potential threat to the banking system.
Coinbase was not happy. “We’d rather have no account than a bad account,” said the company’s CEO, Brian Armstrong. he wrote on X.
After the January vote was canceled, the White House hosted negotiations between crypto firms and the banking industry to find a solution. Coinbase seemed happy with the news chargewhich would allow certain forms of revenue while prohibiting others.
“It is clear that this is a strong compromise and the result of hard work by all parties involved,” said Faryar Shirzad, the company’s chief policy officer. published on social media on Tuesday. He added: “We can’t wait to see the bill move forward this week.”
However, the language may change. Banking groups have he argued that it offers too much wiggle room and would allow exchanges to “easily circumvent the ban”.
“Without clear rules, there is a real risk that we will see the bank deposits that drive local lending and economic growth divert to these stablecoin offerings,” said Brooke Ybarra, senior vice president of the American Bankers Association.
The provision could be up for debate at Thursday’s committee hearing, called a markup, because senators from both parties can submit amendments to the bill. And he will almost certainly face more scrutiny if the bill moves to a vote in the full Senate.
“There’s a lot of knowledge, learning and skill involved,” said Stephen Gannon, a partner at the law firm Davis Wright Tremaine, who followed the legislation. “Both sides have a lot to lose if they don’t get it over the line.”
