The latest text of the Digital Asset Market Clarity Act (CLARITY) released by Senate Republicans has introduced unexpected housing provisions while omitting ethics language, drawing criticism from Democratic lawmakers ahead of a scheduled markup on Thursday. The bill, which aims to establish a federal regulatory framework for digital assets, now faces uncertain bipartisan support.
Unexpected Housing Provisions Raise Questions
On Monday, Senators Tim Scott, Cynthia Lummis, and Thom Tillis unveiled the updated version of the CLARITY Act, which includes a housing pilot program called the Build Now Act in its final pages. According to a section-by-section summary, the provision is designed to incentivize housing development in certain Community Development Block Grant jurisdictions. The inclusion of housing policy in a crypto market structure bill has surprised observers and raised questions about legislative strategy.
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Ethics Language Remains a Sticking Point
Senator Kirsten Gillibrand and other Democrats have stated they will not support the bill on the Senate floor without clear ethics provisions addressing potential conflicts of interest, particularly concerning President Donald Trump’s crypto ventures. Senator Elizabeth Warren criticized the bill sharply, saying it “puts investors, our national security and our entire financial system at risk.” Senator Angela Alsobrooks, who helped negotiate a stablecoin yield compromise, expressed hope for a bipartisan markup with an ethics compromise.
What the CLARITY Act Would Do
The CLARITY Act would grant the Commodity Futures Trading Commission (CFTC) expanded authority over digital asset oversight, shifting responsibilities traditionally held by the Securities and Exchange Commission (SEC). The bill explicitly prohibits paying interest or yield on payment stablecoins, except for rewards tied to bona fide transactions. It also includes protections for software developers from money transmitter requirements, a provision welcomed by the DeFi Education Fund.
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Path to Passage Remains Uncertain
The Senate Agriculture Committee advanced the bill along party lines in January, but it must clear the Banking Committee, the full Senate, and reconcile with the House before becoming law. The legislation would need 60 votes to pass the Senate, requiring bipartisan support. The stablecoin-focused GENIUS Act passed the Senate in June 2025 with a 68-30 bipartisan vote, offering a potential precedent for cooperation.
Conclusion
The CLARITY Act represents a significant attempt to bring regulatory clarity to the digital asset market, but the inclusion of unrelated housing provisions and the absence of ethics language have complicated its path forward. Thursday’s markup will be a critical test of whether bipartisan compromise is achievable.
FAQs
Q1: What is the CLARITY Act?
The Digital Asset Market Clarity Act is a proposed US law that would give the CFTC greater authority over digital asset regulation, shifting oversight from the SEC.
Q2: Why is the housing provision controversial?
The Build Now Act, included in the latest version, is a housing pilot program unrelated to crypto, leading critics to question its inclusion in a market structure bill.
Q3: What happens if the bill doesn’t pass the Senate Banking Committee?
If the bill fails in committee, it cannot proceed to a full Senate vote, effectively stalling the legislation unless reintroduced in a future session.
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