- Seven Republicans backed Sen. Jerry Moran’s amendment to strengthen restrictions on stablecoin yield and rewards.
- The CLARITY Act failed to advance 49-50 on Sept. 15, falling short of the 60 votes required for passage.
- The SEC and CFTC are advancing separate crypto measures, including tokenized securities relief and proposed market rules.
The Clarity Act’s Senate failure exposed another Republican split over stablecoin yield rules, according to Punchbowl News. Senior reporter Brendan Pedersen reported that seven Republicans backed an amendment from Sen. Jerry Moran. The proposal would have strengthened stablecoin yield restrictions sought by banking groups, adding another hurdle to the bill’s 60-vote path.
Stablecoin Yield Becomes A Senate Flashpoint
Moran’s amendment would have changed the Clarity Act’s rules governing stablecoin yield and rewards. Banking advocates had sought tighter restrictions, while crypto industry participants opposed the changes.
The amendment drew more than a dozen cosponsors, including seven Republicans. The dispute centered on whether stablecoin rewards could pull deposits away from banks. The September 14 draft included a Treasury “circuit breaker” for substantial deposit flight.
The Treasury secretary could determine whether significant deposit flight was occurring. The department would then write rules restricting stablecoin yields or rewards.
Clarity Act Expanded During Negotiations
The Senate version grew substantially, reaching roughly 635 pages from an initial 275 pages. The draft also added provisions involving financial oversight. The draft preserved SEC anti-fraud and market manipulation authority.
It also added CFTC rulemaking, best-execution requirements and whistleblower protections. Meanwhile, DeFi provisions addressed software developers, miners and validators. Ethics provisions also expanded, including restrictions involving federal officials and digital assets.
However, the Senate failed to advance the bill on Sept. 15. The procedural vote ended 49-50, below the 60 votes required. Reuters reported that four Republicans voted against advancing the measure.
Regulators Move Forward Without New Legislation
The failed vote leaves regulators handling several areas through existing authority. The SEC issued its Innovation Exemption less than 48 hours after the vote.
The exemption allows certain tokenized securities venues and liquidity providers to operate under five-year conditional relief. The CFTC also issued a no-action letter covering passive software providers.
The CFTC also submitted draft crypto market rules to the White House on Sept. 17. The proposal could establish a crypto asset market exchange category and allow leveraged and margined trading.