Senate Banking Committee Releases 309-Page CLARITY Act Draft

The U.S. Senate Banking Committee published the full 309-page text of the Digital Asset Market Clarity Act late Monday, setting up a markup vote on May 14 at 10:30 AM ET. The bill splits crypto oversight between the SEC and CFTC and mandates 1:1 reserves for payment stablecoins.

Want to know how the CLARITY Act's stablecoin rules could affect DeFi yields? Web Snack breaks it down every week.

How the CLARITY Act reached its 309-page Senate draft

The bill first passed the House in July 2025 by a 294-134 bipartisan vote. A 278-page Senate draft followed in January 2026, but the Banking Committee postponed its markup after Coinbase withdrew support over a blanket ban on stablecoin yield and unclear protections for open-source developers.

Senators Thom Tillis and Angela Alsobrooks brokered a yield compromise on May 1, banning passive interest on stablecoins while preserving activity-based rewards like staking and transaction incentives. Coinbase CEO Brian Armstrong confirmed support, saying participants "got the must-haves" even if not everything they wanted. The company is now working with at least five major global banks on implementation.

The revised Senate text adds 31 pages to the January draft and expands to nine titles covering DeFi regulation, banking activities tied to digital assets, illicit finance provisions, and bankruptcy protections.

SEC, CFTC, and stablecoin reserves: what the 309-page bill specifies

The CLARITY Act draws a hard jurisdictional line. The SEC keeps authority over initial token sales and assets that function as securities. The CFTC gets exclusive jurisdiction over spot markets for tokens classified as digital commodities, including assets that reach a sufficiently decentralized state.

Payment stablecoins fall under joint Federal Reserve and state banking regulator oversight. Issuers must hold qualifying reserves at a 1:1 ratio - restricted to short-duration U.S. Treasuries under 90 days, overnight repurchase agreements, and central bank deposits. That standard is tighter than current market practice. Tether's USDT disclosures have historically included corporate paper and money market funds, neither of which would qualify.

"This bill reflects serious, good-faith work across the Committee and delivers the certainty, safeguards, and accountability Americans deserve" - Tim Scott, Chairman, Senate Banking Committee

Missing ethics provision threatens 60-vote Senate threshold

The 309 pages contain zero provisions restricting government officials from profiting off the crypto industry. That omission is the bill's biggest political risk. Senator Elizabeth Warren called the bill a vehicle to "turbocharge Donald Trump's crypto corruption," citing an estimated $1.4 billion in crypto gains by the president and his family.

The conflict-of-interest section falls outside the Banking Committee's jurisdiction, so it must be added later in the legislative process. Senator Kirsten Gillibrand stated at Consensus 2026 in Miami that Democrats will block the bill without ethics language. The bill needs 60 votes to pass the full Senate, meaning meaningful Democratic support is non-negotiable.

The American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America issued a joint letter warning that yield-bearing stablecoins could drain insured deposits and destabilize mortgage funding. That lobbying pressure adds another layer of negotiation ahead of Thursday.

CLARITY Act timeline: markup, amendments, and the July 4 target

Committee members have until close of business Tuesday, May 13, to file amendments. If the bill clears committee on Thursday, it moves to reconciliation with the Senate Agriculture Committee's separate Digital Commodity Intermediaries Act, which passed committee in late January 2026.

From there, the merged text needs 60 Senate votes, then a return trip to the House for any differences from H.R. 3633. The White House has set July 4 as its target for presidential signature. Polymarket traders put the odds of the CLARITY Act becoming law in 2026 between 67% and 75%.

The bill also includes the Blockchain Regulatory Certainty Act, which protects non-custodial software developers and peer-to-peer transactions from money transmitter classification - a carve-out that addresses developer liability concerns from earlier drafts but has drawn pushback from law enforcement groups.

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P.S. This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and make independent decisions.