Clarity Act clears key Senate hurdle: What it means for crypto users, stablecoins and exchanges

The Republican-led Senate Banking Committee on Thursday advanced long-awaited legislation that would create regulations for cryptocurrencies – marking a major step for the bill – Clarity Act – that had been delayed due to disagreements between crypto firms and banks

All Republicans on the committee voted in favor of advancing the bill, and were joined by Democrats including Arizona Sen. Ruben Gallego and Maryland Sen. Angela Alsobrooks, in a huge win for the crypto sector and a potential lifeline for the bill’s chances of passage this year.

“This legislation does not take sides between traditional finance and new technology,” said Senate Banking Committee Chair Tim Scott. “It brings digital assets out of the shadows and into a system that is safer, fairer and more transparent.”

The proposal will now move to the full Senate for debate.

Here is a look at what it means for crypto users if the bill becomes a law:

What is Clarity Act and how would it regulate crypto?

The bill – Clarity Act – aims to establish a clear regulatory guidelines for digital assets

It would make the Commodity Futures Trading Commission (CFTC) the main regulator for much of the crypto industry, while the Securities and Exchange Commission (SEC) would continue overseeing digital assets that qualify as securities.

How will the bill tighten anti-money laundering rules for crypto firms?

There will be more transparency around anti-money laundering rules.

The bill says that crypto exchanges, brokers, and dealers, like financial institutions, should be treated as financial institutions under the Bank Secrecy Act. This puts crypto firms largely under the same anti-money-laundering regime as banks that would force them to follow strict anti-money laundering rules, verify customer identities, and conduct proper checks.

What it means for stablecoin rewards?

Though there will be no rewards on idle stablecoin balances if the bill becomes a law, crypto users will be rewarded for other activities associated with stablecoins, such as sending a payment.

The crypto lobby had originally hoped to pass rewards to customers for keeping stablecoin in an account. Banks have pushed back on this provision, saying it closely resemble bank deposits and could eventually shift deposits away from the regulated banking system.

How does the Clarity Act define a ‘decentralised’ crypto platform?

The Clarity Act would set rules to decide whether a crypto platform is truly decentralised. A platform would not qualify as “decentralised” if it can block users or give special privileges to certain users.

If it fails to meet the criteria, it would be treated as a financial institution and would have to monitor transactions and report suspicious activity, as banks do.

But challenges remain for the bill

It remains uncertain whether senators and the White House can agree on a bipartisan ethics rule that would stop government officials from making money through crypto-related businesses. Those ethical concerns largely target President Donald Trump, whose family’s wealth has been transformed by digital assets.

Some Democrats have also said said they will not support the legislation without stronger consumer protections and software developer prosecution provisions.

If they can clear those hurdles with the support of enough Democrats, the bill could garner enough votes to pass the Senate. It would still need to be voted on again in the House, which passed a separate version of the legislation in 2025.