What happened?
The CLARITY Act, the US crypto market structure bill (that is, the rules dividing oversight of digital assets among regulators), has hit an obstacle nobody saw coming. It is not a dispute over the regulation of cryptocurrencies itself, but over ethics rules for politicians and who should police their enforcement.
According to Kryptonovinky.sk, ethics has become the biggest brake on the entire bill right now. Both Republicans and Democrats say they want to push the law through, but they cannot agree on how to set up oversight of the ethics rules.
Why did Gallego reject the Republican proposal?
On Tuesday, or according to Cointelegraph on Wednesday, Senate Republicans released the proposed wording of the ethics section of the CLARITY Act. Democrats rejected it.
Democratic Senator Ruben Gallego, quoted by Cointelegraph via the daily Politico, described the Republican counterproposal in very harsh terms and questioned whether it was a serious attempt at a deal. So this is a political dispute, not a technical one: both sides are tugging over who will have the final say in enforcing ethics standards.
The exact wording of the contested passages and the specific oversight mechanism the two sides are split over does not emerge in detail from the available sources. That remains unknown for now.
How does Wall Street view the bill?
Here the picture is interestingly divided. According to Decrypt, Goldman Sachs CEO David Solomon came out in support of the CLARITY Act, breaking with part of Wall Street.
On the other side stand Jamie Dimon, the head of JPMorgan, and banking industry associations. According to Decrypt, their objection targets the provisions on yields from stablecoins (stablecoins are cryptocurrencies pegged to a value, typically the dollar). The concern is that the ability to pay interest on stablecoins could lure deposits away from traditional banks.
| Actor | Position according to sources |
|---|---|
| David Solomon (Goldman Sachs) | Supports the bill |
| Jamie Dimon (JPMorgan) | Opposed, worried about bank deposits |
| Banking industry associations | Warn against stablecoin yields |
Will the bill be debated before the summer break?
Probably not. According to CoinDesk, Senate Majority Leader John Thune said the deadline to finish the market structure bill before senators head off for the summer recess will most likely be missed. The debate, however, could still begin before the break.
In other words: the bill probably will not be lost, just delayed. A specific new deadline does not emerge from the available sources.
What to watch in cases like this
With bills of this type, what usually proves decisive is not the content of the regulation itself but the accompanying passages the parties can get stuck on. Here it is the ethics rules. It is worth watching whether Republicans and Democrats find a compromise on the oversight mechanism, what the final fate of the stablecoin yield provisions will be (given the banks' opposition), and when a new date for the debate emerges.
charliedesk does not give recommendations on what to do. We show what happened and who said what, with a link to the source.