By Doina Chiacu and Michelle Price
WASHINGTON, Sept 14 (Reuters) – U.S. Senate Republicans on Sunday released a revised draft of major cryptocurrency legislation that they said addressed Democrats’ concerns over ethics provisions and banking industry worries about lending, ahead of a key vote on Tuesday.
The Clarity Act, which would create a regulatory framework for cryptocurrencies, had stalled amid concerns among Democrats and some Republicans that it had insufficient ethics and illicit finance safeguards and could destabilize the banking system by creating more competition for deposits.
On Monday, Republican senators Cynthia Lummis of Wyoming, John Boozman of Arkansas and Tim Scott of South Carolina said the new text incorporated 126 substantive changes made at the request of Democrats. But it was still unclear if it had enough support to reach the 60-vote threshold needed to pass a key procedural vote on Tuesday that could determine the bill’s fate, while the banking industry remained opposed to the text.
Democrats held a call on Sunday night to discuss the new text, according to a source familiar with the discussions. It was not clear whether the new language would sway any votes.
“After a year of intense daily bipartisan negotiations, this bill is ready,” Lummis said in a statement. “Democrats got what they wanted; now they need to take yes for an answer.”
OFFICEHOLDER PROFIT CURBS
Democrats have been pushing, in particular, for the text to include stricter restrictions on public officeholders profiting off their own crypto ventures, an effort in part aimed at U.S. President Donald Trump’s World Liberty Financial, which is run by his sons. Trump in June disclosed that he had made $1.4 billion off his crypto ventures, which also include a meme coin.
The new text also includes stronger language banning political officials from profiting off their own crypto ventures. In a major change, it would give state attorneys general more power to enforce the restrictions.
“President Trump voluntarily agreed to unprecedented ethics restrictions, holding every federally elected official, judge, and their spouses to some of the toughest ethics restrictions in U.S. history,” Lummis said in the statement.
The revision was “a step in Democrats’ direction,” said Ian Katz, managing director at Capital Alpha Partners, in a research note, but added that it doesn’t force political officials to completely shed their investments, which has been a cornerstone of Democrats’ demands.
Staff from Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, expressed concern that the new provision was “empty,” and that Trump’s Office of Government Ethics would still be able to unilaterally shut down any lawsuits.
Spokespeople for senators Ruben Gallego, an Arizona Democrat, and Thom Tillis, a North Carolina Republican, both of whom spearheaded conversations around ethics, did not immediately respond to a request for comment on whether they endorsed the new text.
BANKING INDUSTRY CONCERNS
The revised version of the bill also looks to address long-held concerns from the banking sector that portions of the legislation would allow crypto tokens known as stablecoins to compete with bank deposits, ultimately constraining lending.
However, the banking industry continues to have concerns about language that would allow crypto companies to offer rewards on stablecoins.
In a letter sent on Monday to Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer, several bank trade groups urged Congress to consider targeted changes to the bill.
“The ability of payment stablecoins … to offer incentives similar to deposits and other store-of-value products could lead to deposit flight from our nation’s banks and thereby hinder the ability of depository institutions to extend credit to their customers,” the letter said.
The crypto industry has spent hundreds of millions of dollars campaigning to advance the Clarity Act, which it says will put crypto companies on a solid legal footing, and mounted a final lobbying blitz in states over the August recess, Reuters reported.
(Reporting by Doina Chiacu and Michelle Price in Washington; Additional reporting by Hannah Lang in New York; Editing by Andrea Ricci and Matthew Lewis)
Comments