Key Highlights
- The Clarity Act is facing a possible delay as Senate Banking Committee deadlines clash with Kevin Warsh’s Fed Chair nomination hearing.
- Banks are putting pressure on lawmakers over stablecoin yield rules, which is one of the main reasons the bill could be pushed into May.
- Recent crypto hacks, including the $290M Kelp DAO exploit, are increasing urgency as lawmakers consider tighter DeFi and illicit finance rules in the bill.
The U.S. Senate Banking Committee is heading into a crucial week that could decide whether the Clarity Act moves forward or gets delayed again.
According to a Crypto in America report, the bill is expected to receive a markup this month, but growing pressure from banking groups could push it into May.
Kevin Warsh’s hearing takes center stage
At the start of the week, senators will first focus on another major task. The committee is holding a nomination hearing for Kevin Warsh on Tuesday morning. Warsh has been picked by President Trump to replace Jerome Powell as the next Federal Reserve chair. He has more than $100 million in assets and is also linked to crypto investments, which is why his hearing is getting a lot of attention.
After this hearing, senators have until Friday to decide if they will officially schedule a markup for the Clarity Act. If they do not act in time, the markup will likely move to the second week of May when the Senate returns from its break.
Banking pressure becomes the main delay factor
Right now, one of the main reasons for the delay is pressure from banks. Banking groups, including the North Carolina Bankers Association, are actively pushing their concerns to lawmakers. They are unhappy with parts of the bill, especially rules around stablecoin yield. These groups are asking member banks to call Senator Thom Tillis and other senators to push for changes.
The main issue in this disagreement is how stablecoin rewards are handled. Banks believe the current rules are too strict and could affect traditional banking. Crypto companies, on the other hand, say a compromise has already been reached after more than two months of talks.
However, the final version of the bill has not been made public. Only a small group of banking and crypto representatives have seen it.
Growing tension between banks and crypto groups
In a report, a person familiar with the talks said, “Small banks across the country are not well served by Washington trade associations letting perfect be the enemy of the good.” This means banks should accept the deal instead of trying to change everything and risk losing the agreement completely.
On the other side, White House Crypto Council Executive Director Patrick Witt criticized ongoing lobbying efforts, saying, “It’s hard to explain any further lobbying by banks on this issue as motivated by anything other than greed or ignorance.”
Meanwhile, Senator Tillis has suggested a possible in-person meeting between senators, crypto experts, and banking representatives to resolve remaining issues. He referred to it as a “crypto palooza,” but it is still unclear if this will happen, since it could slow down the process even further.
Even if the bill moves forward, there are still other problems to solve. Lawmakers still need to agree on rules about ethics and decentralized finance (DeFi) before they can vote on the final bill.
Kelp DAO hacks add more pressure to lawmakers
Meanwhile, problems in the crypto world are also adding pressure. Earlier today, a major hack at Kelp DAO, worth around $290 million, caused a liquidity crunch in the DeFi market. The attack affected lending platforms like Aave, leading to frozen funds and users rushing to withdraw money.
Reports say attackers may have used a cross-chain bridge to steal funds. After the attack, Aave had to freeze some markets, and billions of dollars left the platform. Its token price also dropped slightly.
As a result of this, lawmakers are now trying to factor these risks into how the Clarity Act addresses illicit finance and DeFi regulation. With deadlines coming fast and pressure rising from both banks and crypto groups, this week will decide if the bill moves forward or gets delayed again.
Also Read: CFTC Chair Selig Urges Congress to Send CLARITY Act to President
