Investing.com — U.S. senators are preparing to consider a long-awaited regulatory framework for the cryptocurrency sector next week, a move that could break a legislative deadlock between digital asset firms and traditional banks.
The Senate Banking Committee is scheduled to hold an executive session on the “Clarity Act” on May 14 at 10:30 a.m. in Washington, D.C.
If signed into law, the bill would clarify financial regulators’ jurisdiction over the burgeoning sector and define whether specific tokens are categorized as securities or commodities, providing the legal certainty the industry claims is “existential” to its future in the United States.
A central feature of the bill is a compromise regarding dollar-backed stablecoins.
Under a deal brokered by Senators Thom Tillis and Angela Alsobrooks, crypto companies would be prohibited from offering customer rewards on idle stablecoin holdings due to their similarity to traditional bank deposits.
However, rewards for active use, such as sending payments, would remain permitted.
The above provision has sparked a “last-ditch effort” by banking lobbyists to peel away Republican support, with trade groups warning that a “loophole” allowing interest on stablecoins could trigger a flight of deposits from the insured banking system and threaten overall financial stability.
The crypto industry is pushing for the bill’s passage in the coming months before the November midterm elections. While the House passed its version of the Clarity Act last July, the Senate must approve the legislation by the end of 2026 to send it to President Donald Trump’s desk.
The bill currently faces opposition from several Democrats who argue the anti-money laundering provisions are too weak and that more should be done to prevent political officials from profiting from crypto ventures.
To reach the final assent by President Trump, who has pledged to be a “crypto president,” the Act will require support from at least seven Democrats in the full Senate to gain final approval.
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