Cryptocurrency legislation takes one step forward with bipartisan support

Following intense negotiations over the last several months, the Digital Asset Market Clarity Act advanced out of the Senate Banking Committee recently in a 15-9 bipartisan vote.

The bill is the first major U.S. law that defines which crypto assets are commodities (under Commodity Futures Trading Commission oversight) and which are securities (under Securities and Exchange Commission oversight). This distinction is critical because it determines the regulations, compliance requirements, and operational freedom for cryptocurrency in the U.S. market.

Insurance News Net spoke with Ethan Corey, senior counsel at Eversheds Sutherland, to find out what it could mean for financial professionals and some of the potential stumbling blocks as the legislation moves forward.

“The reason the Clarity Act is important is that digital assets are unique. There are no clear statutory ways to regulate these assets,” Corey said. “There is interest in greater guidance and regulations around digital assets.”

There are several areas that would need to be worked out before the legislation can be enacted, Corey said. The first involves the interest on stablecoins.

“While the compromise does not permit any party to pay interest, it would permit certain activity-based rewards. It remains to be seen whether all interested parties will accept the compromise,” he said.

Another potential issue involves conflict of interest and whether elected officials can get into the digital asset game. “If digital assets lose their value, it could be used to blackmail politicians,” Corey said.

During the negotiations, some senators complained about the lack of conflict-of-interest language. Others who voted to advance it reserved the right to vote against it if it didn’t contain specific language, Corey noted.

There is also a split between software developers and law enforcement, he added. Authorities want to be able to track digital assets used in criminal financing, but current statutory language lacks explicit provisions for this access.

The North American Securities Administrators Association issued a statement after the bill advances: “While we are disappointed that the Senate Banking Committee chose to advance a bill with provisions bad actors will seek to exploit to harm investors, we look forward to addressing these shortcomings.”

How advisors might be impacted

If the legislation is ultimately passed, Corey estimated that it will take 18 months to two years to implement fully.

“It would not have much of an impact on day one, but the change will come when the regulations are in place and there is more guidance on how to trade a digital asset,” he said. “What I hope it means is there will be clear rules that require financial professionals to explain digital assets to their clients. Is it a stock? Will it provide downside protections? An income stream? Or, none of the above,” he said.

He said people are using cryptocurrency now, but there are no clear rules for financial advisors as to where it falls.

There is a small number of financial professionals dedicated to dealing with cryptocurrency, and an even smaller niche that handles both digital and non-digital assets, Corey said.

“The bigger impact will come when assets that are currently not digitized become digitized,” he said. “Traditional assets will become more tokenized like cryptocurrency on the blockchain.”

Support for the act

Following the vote to advance the Act, the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America and National Bankers Association issued the following joint statement:

“Today’s Senate Banking Committee vote on the Clarity Act marks an important step in establishing a regulatory framework around digital assets, a goal the banking industry supports.

We continue to believe that these goals can be achieved while also protecting Main Street’s access to community lending, and thanks to banker engagement and the work of senators on both sides of the aisle, especially Senators Tillis and Alsobrooks, the bill that cleared the committee includes several significant improvements over an earlier version.

“The banking industry continues to believe that the Clarity Act should be strengthened further by tightening the prohibition on interest-like rewards for holding stablecoin while also allowing certain payment stablecoin transactions and activities to generate rewards. Without the necessary guardrails, stablecoin offerings are expected to draw away bank deposits and threaten local lending and economic activity across the country. In that spirit, we will continue to work with senators in good faith to address this issue and improve the bill and its chances on the Senate floor.”

Coinbase CEO Brian Armstrong posted on social media site X, calling it a “historic day for crypto and for the future of digital assets in America. Grateful for the countless hours from lawmakers and staff to strengthen this legislation. Big improvement.”

Before it becomes law, the bill still needs to be passed in the Senate, reconciled with the House version that passed in July 2025, and then signed by the president.

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