The US Senate Banking Committee released the full 309-page draft of the Clarity Act on Tuesday, May 12, 2026, making public the cryptocurrency market structure bill it has been developing since January. Committee members now have until close of business Wednesday to file amendments before the scheduled Thursday, May 14 markup vote at 10:30 a.m. in Dirksen Room 538. The bill's public release marks a critical step in the legislative process, allowing committee members and the broader crypto industry to formally review and respond to the proposal before markup proceedings begin. The legislation had previously circulated among industry stakeholders behind closed doors, with the amendment count surfacing roughly 36 hours before the scheduled session. According to Politico, committee members have submitted more than 100 amendments ahead of the markup vote, indicating significant legislative activity in the final days before the vote.
The Clarity Act introduces five critical provisions that will fundamentally alter how crypto markets operate. Provision 1 establishes that covered digital asset service providers cannot pay passive interest on payment stablecoin balances, meaning users cannot earn interest on USDC parked on exchanges. This provision aims to prevent crypto platforms from operating like unregulated banks. Provision 2 permits rewards linked to transactions, platform usage, and other forms of active participation, but bans rewards for merely holding a balance, with the SEC, CFTC, and Treasury defining specific rules around this distinction. Provision 3 provides non-custodial blockchain developers with protections, ensuring they won't be classified as money transmitters just for code that moves value, though those who knowingly facilitate illegal transfers remain liable. Provision 4 authorizes national and state banks, and certain credit unions to use digital assets and blockchain for existing banking activities such as custody and trading, encouraging traditional financial institutions to engage in crypto. Provision 5 establishes joint SEC-CFTC regulations for digital asset portfolio margining and modernized recordkeeping standards, aiming to resolve jurisdictional issues that have created compliance challenges for crypto firms.
Senator Elizabeth Warren leads with 40+ amendments to the Clarity Act, according to Crypto In America host Eleanor Terrett. Among her most significant proposals is an amendment that would block the Federal Reserve from granting master accounts to crypto companies, representing a direct challenge to the current regulatory framework. Additionally, Senator Jack Reed's amendment would explicitly ban cryptocurrencies from ever being recognized as legal tender in the United States, including a prohibition on using crypto to pay taxes at any government level. This comprehensive legal tender ban would draw a hard statutory line against any future scenario where digital currencies could be used to settle government obligations. Reed has been one of the most consistent crypto skeptics on the committee and has previously collaborated with Warren on the Digital Asset Sanctions Compliance Enhancement Act.
Five of the country's largest labor unions have formally come out against the Clarity Act, creating a significant political obstacle for committee Democrats. The AFL-CIO, Service Employees International Union (SEIU), American Federation of Teachers (AFT), National Education Association (NEA), and American Federation of State, County and Municipal Employees (AFSCME) all sent letters warning that the bill could jeopardize retirement accounts for millions of American workers. The AFL-CIO, representing over 12.5 million members, warned that the Clarity Act "will prompt a flood of digital assets into pension plans, retirement accounts, and our broader financial system under an ineffective regulatory system." Labor leaders argue that combining President Trump's February 2026 executive order clearing the way for pension funds to hold cryptocurrency assets with the Clarity Act's regulatory framework would create a direct pipeline for volatile digital assets to flow into workers' retirement savings without traditional protections.
The American Bankers Association has sent more than 8,000 letters to Senate offices since last Friday, according to Crypto In America reports, focusing on the stablecoin yield compromise brokered by Senators Thom Tillis and Angela Alsobrooks. The banking lobby alone sent more than 8,000 letters to senators objecting to stablecoin yield-sharing provisions, with the stablecoin yield debate centering on whether the bill's language banning interest payments on stablecoins should include the word 'solely', a single-word distinction that determines whether yield-bearing stablecoin products are structurally compliant or categorically prohibited. For card-side businesses, the more relevant amendments are those touching custody and stablecoin reserve rules, as issuers running custodial spend accounts on US infrastructure would feel any tightening of segregation or reserve standards within months of passage. The three largest U.S. banking trade groups - the American Bankers Association (ABA), Bank Policy Institute, and Independent Community Bankers of America (ICBA) - formally rejected the Tillis-Alsobrooks stablecoin yield compromise on May 9, with ABA's CEO Rob Nichols warning that activity-based rewards could trigger migration of capital from traditional banking to stablecoin wallets.
The Clarity Act faces an urgent timeline that could determine its fate for decades. Senators Cynthia Lummis (R-WY) and Bernie Moreno (R-OH) have warned that the bill could effectively die if it doesn't pass the committee before the May 21 Memorial Day recess, with failure potentially pushing meaningful reconsideration to 2030 or beyond. The clock is tighter than the July 4 headline date suggests, as the Memorial Day deadline represents a critical juncture for the legislation's progression. Senate Majority Leader Chuck Schumer personally attended a Democratic member meeting where he appeared "engaged and eager for members to get to a yes on the Clarity Act" but stressed that ethics negotiations need to be further along before Thursday's markup. The committee's Republican majority argued that the bill assigns clear regulatory authority between the SEC and CFTC, requires disclosures, and adds anti-fraud protections across digital asset markets, with Senator Cynthia Lummis warning that if the bill does not clear the committee before the May 21 Memorial Day recess, it could effectively be pushed to 2030.
