Clarity Act could die, expert warns, but crypto lobbyists say bill has ‘meaningful momentum’

US crypto lobbyists are refusing to admit defeat on the Clarity Act, amid claims the bill could “die” if it is not passed before this summer.

The bill aims to enshrine key crypto guidelines and regulations into law. And its advocates say it will provide key protections for the crypto sector that could protect it from future crypto-sceptic governments. The issue of whether or not stablecoin holdings should pay yields has proven divisive, however, resulting in an impasse.

“[Clarity] has meaningful bipartisan momentum because leaders in both parties understand the need for clear, durable rules for digital assets,” Summer Mersinger, CEO of the Washington-based crypto lobbying group the Blockchain Association, told DL News. “The Blockchain Association and our members will keep working with lawmakers on both sides of the aisle to help get this legislation to the President’s desk for signature.”

A senior Coinbase official this month said the bill could be heard by the Senate Banking Committee in the next few weeks. But others say that if the deadlock continues any further, hopes of passing Clarity will vanish once and for all.

‘No post-summer progress’

Mersinger’s statement comes as legal experts warn of dire consequences if the impasse is not broken soon.

“If we get into the summer months, it’s just probably not going to happen,” John E. Deaton, a US-based lawyer and a Republican candidate for the Senate in Massachusetts, said during an appearance on the Paul Barron Network YouTube channel. “Come summer, the midterms are going to consume everything in this country.”

And that will leave little political oxygen for crypto regulation, Deaton said.

“Let’s say that the midterms go very bad for the Republicans,” he postulated. “And not only does the House flip, but the United States Senate flips. If that happens, guess who the chairwoman of the banking committee is in the United States Senate? It is Elizabeth Warren.”

The chances of Clarity passing with Warren on the Senate Banking Committee would be “slim to none,” Deaton said.

A Democrat-heavy banking committee would seek to “engage in regulation by enforcement,” which would “chase everything” in the crypto space offshore,” the lawyer added.

“It’s going to die,” Deaton said. “Innovation will die potentially here.”

Divisions remain

Crypto advocates remain divided on the wisdom of making concessions on the question of stablecoin yields in exchange for fast-tracking the bill’s progress.

But lobbyists say the deal on the table is a good one — and should be taken while the political winds remain in the industry’s favour.

“Getting [Clarity] done would strengthen US competitiveness and provide certainty for innovators and consumers alike,” Mersinger said.

Tim Alper is a News Correspondent at DL News. Got a tip? Email him at [email protected].