CLARITY Act Stalls Amid Controversy Over Crypto Regulation
The CLARITY Act, which has been stalled after failing in a procedural vote on September 15, aims to establish regulatory rules for cryptocurrency and digital assets. The bill defines a digital asset as 'any digital representation of value which is recorded on a cryptographically-secured distributed ledger or other similar technology.'
The CLARITY Act sets up a structure for regulation that would divide oversight between the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC). The current version gives the CFTC more power than the SEC, but classification of assets would depend on their characteristics.
One provision in the bill allows for criminal prosecutions related to blockchain issues. However, this is not popular with developers, who might face liability under 18 USC 1960. The Treasury secretary would also monitor for signs of bank deposit flight tied to stablecoin rewards 18 months after enactment.
The CLARITY Act has been criticized for grandfathers in existing business interests, including those of President Trump's family-owned World Liberty Financial. This means that Trump's existing cryptocurrency holdings would not be affected by the law if it passes.
With the bill stalled, there is more time to learn about the CLARITY Act and contact members of Congress with concerns. The current version has been described as weak in addressing banking industry concerns, leading four Republicans to join Democrats in voting against it.