Key facts
- The CLARITY Act would permit national banks to buy and sell digital assets, including holding them on their balance sheets.
- Senator Lummis believes the bill could trigger substantial capital inflows into the U.S.
- The Senate's vote is a cloture motion requiring 60 votes for passage.
- Opposition exists from some Democrats and banking industry groups concerned about stablecoin provisions and deposit drains.
- Seventeen state attorneys general have raised concerns about the bill's impact on fraud enforcement.
Senator Cynthia Lummis stated on September 15 that the CLARITY Act, facing a critical vote in the U.S. Senate, would enable all U.S. banks to freely purchase and hold Bitcoin and other digital assets. Lummis argued this change could lead to one of the largest capital inflows in U.S. history. The remarks were made during a live Bloomberg Crypto interview from Capitol Hill, ahead of a key 60-vote cloture motion on the bill.
The CLARITY Act's Section 401 would reportedly allow national banks to engage in buying and selling digital assets, including holding them on their balance sheets, a move that current regulations effectively prohibit due to a 1,250% risk-weighting under Basel rules. Lummis has been advocating for such changes for months, contending that current rules act as a de facto ban.
However, the bill faces significant hurdles. The Senate vote is a procedural hurdle, and at least seven Democrats would need to cross party lines to reach the 60-vote threshold. Senate Democrats had sent a counterproposal on September 14, deeming the Republican "final" ethics package insufficient. The banking lobby has also expressed opposition, particularly concerning Section 10404, which they fear could lead to community bank deposits being drained into stablecoin products. Additionally, seventeen state attorneys general, led by New York's Letitia James, have warned that the bill could weaken state fraud enforcement capabilities.
Despite the opposition, Lummis has defended the bill, notably responding to JPMorgan CEO Jamie Dimon's vow to fight its stablecoin provisions. Should the CLARITY Act fail to pass, regulatory bodies like the SEC and CFTC have indicated they will continue to pursue crypto-related rulemaking through initiatives such as Project Crypto and Regulation Crypto Assets. Coinbase CEO Brian Armstrong also suggested that regulatory clarity for crypto would still be achieved. Analysts, however, caution that a failure of the CLARITY Act could trigger a selloff in Bitcoin and other cryptocurrencies before a potential fourth-quarter rebound.