The United States Senate is preparing for a pivotal vote on Tuesday regarding comprehensive cryptocurrency legislation after Republican lawmakers unveiled a final draft tackling several major negotiating hurdles, though uncertainty remains over whether the bill commands sufficient backing to move forward.
The Senate will conduct its initial procedural vote to consider advancing the measure, with the updated language prompting cautious optimism across parts of the digital asset sector alongside fresh pushback from banking institutions and legislators who argue that vital safeguards remain inadequate.
Senate Republicans released a revised draft late Sunday addressing three contentious topics that have dominated discussions: potential crypto conflicts of interest involving President Donald Trump, the ongoing conflict between traditional banks and the crypto industry over stablecoin rewards, and protections for software developers.
Key negotiator Senator Cynthia Lummis, a Republican from Wyoming, urged her legislative colleagues to support the bill’s advancement.
"The Clarity Act is right in front of us and this moment won’t come along again for years," Lummis stated in a post on X. "Let’s take the win and get this done."
Clarity’s long, winding road
Throughout the past year, the Senate has attempted to advance its version of the Clarity Act, which would establish the first comprehensive federal regulatory framework for the digital asset industry by expanding oversight authority for the Commodity Futures Trading Commission alongside the Securities and Exchange Commission.
The House passed its iteration of the Clarity Act over a year ago, but the Senate has encountered continuous obstacles, ranging from initial disputes between lenders and crypto proponents regarding stablecoin rewards regulation to provisions concerning software developer terms and ethical standards.
The updated Sunday night text grants state attorneys general a mechanism to enforce conflict-of-interest regulations for government officials, modifies the Blockchain Regulatory Certainty Act to eliminate references to a federal criminal statute, and empowers the Treasury secretary to enact an 18-month circuit breaker on stablecoin rewards if payment stablecoins provoke substantial deposit withdrawals.
It remains uncertain whether these adjustments will secure the requisite 60 votes needed to pass the upcoming hurdle. Certain Democrats have voiced lingering ethical reservations. Meanwhile, Republican Senators Susan Collins and John Cornyn appear undecided regarding their Tuesday votes, according to Punchbowl News.
Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, estimates a 25% probability that the Clarity Act is enacted into law this year. Because the House is scheduled to be out of session for the final two weeks of September, the legislation would likely not face a vote until after the November elections if it must return to the lower chamber.
The ethics language may still fail to satisfy moderate Democrats, and the scope of authority granted to state attorneys general is restricted, Seiberg noted.
"This is not a negotiated deal," Seiberg remarked. "Democrats are being presented with the final product."
Trump and ethics
A primary point of contention over the past year has centered on managing President Trump’s expanding digital asset involvement. Trump’s extensive cryptocurrency holdings have ballooned to hundreds of millions of dollars tied to World Liberty Financial, which is managed by his sons, alongside his personal memecoin.
In July, Trump accepted an ethics provision that would bar any public official, government employee, or their respective spouses from issuing or sponsoring digital assets. The initial text specified that the Department of Justice, rather than state attorneys general, would enforce this rule, which immediately drew criticism from Democrats who argued the measure fell short.
The newest version introduces a role for state attorneys general in enforcing public official conflict-of-interest rules, directly addressing a core Democratic demand.
Nonetheless, these modifications have not resolved the controversy.
Senator Elizabeth Warren and other Democratic lawmakers have questioned the practical mechanics of these enforcement mechanisms, contending that state attorneys general would lack adequate authority to initiate direct legal actions against government officials, including the president.
Later on Monday, Warren spearheaded an analysis of the updated bill alongside Democratic staff on the Senate Banking Committee, concluding that the legislation would not prevent Trump from accumulating additional wealth in crypto because the ethics component remains unenforceable due to the Justice Department holding sole discretion over whether to pursue legal action against him.
"The bill contains only an empty provision allowing states to sue the Attorney General to try to force him to act," the analysis stated. "It then allows Trump’s own Office of Government Ethics (OGE)—currently led by his hand-picked Acting Secretary of Labor—to issue a legal opinion unilaterally shutting down that lawsuit."
Democratic Senators Ruben Gallego and Angela Alsobrooks previously stated they would not vote in favor of the Clarity Act without proper ethics provisions included, though neither responded to inquiries concerning the newly revised bill.
By Monday afternoon, Democratic Senator Mark Warner indicated his belief that the updated ethics stipulations remain insufficient.
"There’s been some movement. I don’t think the ethics provision is near enough," Warner told Burgess Everett of Semafor in a post. "And again, it’s frustrating because we’ve had these same three issues outstanding for six, eight weeks, and why this couldn’t have been dealt with earlier? I’m really concerned."
‘We have to live with it’
Senate Republicans also altered the wording within the Blockchain Regulatory Certainty Act, which generally establishes a regulatory safe harbor for non-custodial developers to clarify that they do not qualify as money transmitters.
The updated text eliminates references to a federal criminal statute that would have shielded non-controlling developers, thereby changing the mechanism protecting them from criminal prosecution. Coin Center, an advocacy organization that championed this section of the bill, stated on Monday that while the legislation represents overall progress, it "stops short of resolving the essential criminal law issue" currently being litigated in courts.
"We are obviously very disappointed that critical protections for noncontrolling developers from misapplication of criminal law were removed," a source within the cryptocurrency industry told The Block.
When questioned about whether Congress should stall the Clarity Act to rectify the issue, the source replied "tbd" and noted that legal experts were currently reviewing the language.
Another industry insider remarked that while the modification is unappealing, "we have to live with it."
Representative Tom Emmer, a Minnesota Republican who originally co-sponsored the bill, expressed reservations regarding that specific provision during a Monday event hosted by the Solana Policy Institute. According to reports from Bloomberg Government, Emmer stated his disapproval over relinquishing a "safe harbor on the criminal side."
Banks v crypto
Another persistent obstacle for the Clarity Act involves the regulatory treatment of stablecoin rewards, which permit users to earn yields on deposited balances. Traditional financial institutions have warned that these incentives will drain deposits away from conventional banks, whereas digital asset organizations argue that restricting such rewards would stifle innovation, creating a high-stakes legislative battle in Washington.
The revised legislation empowers the Treasury secretary to implement an 18-month circuit breaker on stablecoin yields if payment stablecoins provoke significant deposit drains from community banks. This provision is designed to supply federal regulators with a short-term mechanism to mitigate the fallout of large-scale capital withdrawals from smaller financial institutions.
Treasury Secretary Scott Bessent stated that he would not hesitate to utilize the powers granted under the updated text.
"If stablecoins cause harm to community banks, I will not hesitate to use these tools to ensure they remain fully protected," Bessent noted in a post on X. "Community banks are essential to U.S. economic performance and Main Street growth."
Nevertheless, banking trade associations argued on Monday that these measures do not go far enough. In a correspondence directed to Senate leadership, eight organizations, including the American Bankers Association and the Bank Policy Institute, asserted that a circuit breaker would trigger only after substantial deposit flight has already occurred.
"Congress should address this risk upfront by ensuring the Clarity Act prohibits payment stablecoin rewards and incentives that function like deposit interest, rather than waiting for harm to banks, borrowers and communities before regulators are empowered to respond. Further technical refinements are needed to ensure that the text clearly and directly prohibits interest-like payments on payment stablecoins," the groups stated.
White House cryptocurrency adviser Patrick Witt voiced frustration regarding ongoing negotiations with banking representatives during a Monday panel hosted by Crypto In America at the Solana Policy Institute, directing attention to the expanded powers granted to the Treasury in the revised draft.
"What more do you want?" Witt asked.
Updated at 9:40 p.m. UTC to include Warner
Originally published at https://www.theblock.co/news/regulation/2026-09-14-where-the-clarity-act-stands-ahead-of-tuesdays-senate-vote-414720.
