CLARITY Clears Banking, The Senate Fight Begins

What happened

In CLARITY Shall Wait, Blockchain Keeps Going, we argued that regulatory clarity had been delayed, not derailed. Last Thursday, CLARITY came back.

On 14 May 2026, the U.S. Senate Banking Committee advanced the revised CLARITY Act by a 15-9 vote. All Republicans supported the bill, joined by two Democrats. This followed earlier milestones: the House introduced the bill in May 2025, advanced it through both the Financial Services and Agriculture committees in June, and passed it on the House floor in July by 294-134. The Senate Agriculture Committee then advanced the companion Digital Commodity Intermediaries Act in January 2026.

The bill is no longer stuck. It is now a live Senate-floor candidate.

The Senate version rewrites large parts of the framework, including token classification, DeFi rules, stablecoin rewards, software-developer protections, self-custody rights, customer-property treatment in bankruptcy, and an innovation sandbox for the SEC and CFTC.

The catalyst matters because it brings the U.S. one step closer to a federal market-structure law for digital assets. After years of enforcement actions, court cases, agency disputes, and offshore activity, the industry may finally get something more valuable than regulatory tolerance: rules.

Impact on our Investment Case

Why CLARITY matters

CLARITY matters because it addresses the core question that has constrained the U.S. digital-asset industry for years: what is a crypto asset, who regulates it, and under which rules can companies build around it?

Too much of the ecosystem still operates in legal uncertainty. A token can be treated as a security by one regulator, a commodity by another, and a technology product by its users. Exchanges do not know which assets they can list. Developers do not know when they become regulated intermediaries. Banks and brokers do not know where crypto custody sits inside their compliance architecture. Asset managers do not know how fast tokenized products can scale.

CLARITY aims to solve this by moving from case-by-case enforcement to statutory categories. It creates clearer lines between the SEC and the CFTC, defines digital commodities and token-related categories, brings digital-asset intermediaries into a federal registration framework, and adds rules for AML, DeFi, stablecoins, custody, and customer protection.

This is why the bill matters beyond crypto. CLARITY is not simply a law for tokens. It is a law about financial market infrastructure.

Stablecoins are becoming the settlement layer for digital money. Tokenized securities are bringing stocks, bonds, funds, and private assets onto blockchain rails. Exchanges such as Coinbase, brokers such as Robinhood, stablecoin companies such as Circle Internet Group, and infrastructure providers across custody, compliance, and trading are all building for the same transition: capital markets moving on-chain.

A clearer legal perimeter lowers the institutional cost of adoption. It does not remove risk, eliminate compliance, or guarantee that every business model will work. But it gives banks, brokers, asset managers, exchanges, custodians, and payment companies a framework to invest, launch products, and scale.

Stablecoin yield: the key compromise

One of the most sensitive parts of the bill is stablecoin yield. The Senate compromise restricts crypto platforms from paying deposit-like passive yield on stablecoin balances. At the same time, it preserves room for activity-based rewards linked to transactions, settlement, liquidity provision, collateral, staking, governance, or loyalty programs, subject to future rulemaking.

Banks want to prevent stablecoins from becoming direct substitutes for interest-bearing deposits. Crypto platforms want enough flexibility to build attractive products around digital dollars. The compromise does not settle the issue permanently, but it creates a realistic path: stablecoins as payment and settlement instruments, with yield-bearing products structured separately and more explicitly around risk-taking activities.

For our stablecoin thesis, this is constructive. This framework should not slow adoption.

What happens next?

The next phase is political. The Senate still needs to reconcile the Banking Committee text with the Senate Agriculture Committee’s work on digital commodity intermediaries. It then needs floor time and 60 votes, meaning bipartisan support remains essential. If the Senate passes a revised version, both chambers will still need to reconcile their texts before final approval.

The fight will likely focus on three issues.

• Democrats want stronger ethics and conflict-of-interest rules, especially given the political sensitivity of crypto-related ventures linked to President Trump and his family.
• Several lawmakers want tougher Anti Money Laundering (AML) and national-security provisions.
• The banking lobby, supported by community banks, will keep pushing to narrow the stablecoin-reward compromise, arguing that even activity-based rewards could compete with deposits and put pressure on rural-state Republicans.

We do not know whether the bill will be approved this summer or later this year. The midterms could also alter the process and force a revision of the text. But it is in the interest of all parties to eventually have this regulatory framework in place.

Our Takeaway

CLARITY is a once-in-a-generation legislative project for digital assets.

The bill does not merely adjust an SEC rule or clarify a narrow product category. It aims to redraw the regulatory architecture for an entire technology-finance stack: digital commodities, token issuance, stablecoins, DeFi, custody, trading, settlement, self-custody, and tokenized securities.

If enacted, CLARITY would do for blockchain what major financial laws did for earlier market eras: define the rules, assign regulatory responsibilities, and decide who can compete. Banks, brokers, exchanges, asset managers, custodians, payment networks, and crypto-native firms would all need to adapt.

The U.S. is moving closer to a legal framework that can unlock institutional adoption, accelerate stablecoin use cases, support tokenization, and bring more digital-asset activity onshore.

Our blockchain and stablecoin strategies are built around that transition. Companies providing compliant infrastructure, exchange access, custody, stablecoin issuance, tokenization rails, and blockchain-based financial services should benefit as the regulatory perimeter becomes clearer.

CLARITY may still need time, but the destination is clear: digital assets are becoming part of the financial system.