May was a landmark month for crypto market structure legislation. The Senate Banking Committee advanced the Clarity Act on May 14 by a 15-7 vote, with two Democrats — Sens. Angela Alsobrooks (Md.) and Ruben Gallego (Ariz.) — crossing party lines. Both made clear their floor votes are contingent on further negotiations, particularly on ethics language and law enforcement tools.
The over-300-page bill creates registration pathways and standards for crypto issuers, intermediaries, and decentralized projects, covering digital asset activities as they intersect with banking and securities law and anti-illicit finance obligations. The committee markup was contentious: Chairman Tim Scott limited Democratic amendments, leading to complaints about process, while several bipartisan amendments on insider trading disclosure, state consumer protections, DeFi “control tests,” and an AI regulatory sandbox passed with cross-party support.
The ethics issue remains the central sticking point. Sen. Chris Van Hollen proposed prohibiting the president, vice president, members of Congress, and political appointees from owning or promoting crypto ventures — a direct response to the Trump family’s ties to World Liberty Financial and other crypto businesses. Republicans rejected the amendment in committee. Both Alsobrooks and Gallego stated they will not vote for the bill on the floor without an ethics provision. The White House has said it will accept ethics language only if it applies uniformly to all officials, not any specific individual.
The Senate Banking Committee bill must still be merged with the Senate Agriculture Committee’s parallel product — which governs CFTC oversight of digital assets and passed on party lines in January — before a floor vote. A White House target of July 4 completion appears aggressive. The House would also need to pass an updated version.