The US crypto industry has launched a concerted push for Congress to pass federal market structure legislation known as the “Digital Asset Market Clarity Act of 2025” (HR 3633).
The legislation is seen by industry advocates as the necessary “missing layer” of federal law for the industry to thrive.
While the “GENIUS Act” set ground rules for payment stablecoins last year, the Clarity Act aims to establish the overarching market structure for secondary trading, asset classification and registration of intermediaries.
Without this, major players argue, the US market will remain trapped in a patchwork of state licensing and enforcement guidelines.
Yet the road to a deal remains fraught with complex technical hurdles.
According to Alex Thorn, head of research at Galaxy Research, a bipartisan meeting took place on January 6
exposed a sharp divide between a Republican drive for speed and a set of new Democratic demands that could fundamentally change the legislation’s impact on token issuance and software development.
The Problems Holding Back the Clarity Act
The immediate focal point is the Senate calendar in particular. Republicans are pushing for an increase in the bill through the Senate Banking Committee as early as Thursday, January 15.
This aggressive timeline is intended to establish a framework before the legislative window narrows later this year.
However, Thorn’s analysis of Wednesday’s bipartisan talks suggests it remains unclear whether the two sides can bridge significant policy gaps in time to secure a framework that can pass both chambers.
The main point of friction has emerged around the treatment of decentralized finance (DeFi).
According to Thorn, Democrats have introduced a series of robust requirements to bring the DeFi sector under the umbrella of traditional financial supervision.
Some of their top requests include mandating “front-end sanctions” for DeFi interfaces, a requirement that would force developers to screen users at the entry point, and granting more powers to the Treasury Department to take “special measures” to police the sector.
Additionally, Democrats are seeking specific regulatory provisions for “non-decentralized” DeFi. This category creates a new regulatory domain that would likely include many existing projects that claim to be decentralized but retain some degree of administrative control or centralized hosting.
In addition to the structural debate over software, the Democratic proposal includes a series of stricter investor protections. Negotiators are pushing for new rules for crypto ATMs and expanded consumer protection powers for the Federal Trade Commission (FTC).
Perhaps most consequential for the capital formation side of the industry is a proposed $200 million limit on the amount of capital issuers can raise under certain exemptions.
Furthermore, the proposal would upend the current regulatory dynamic: instead of waiting for enforcement, protocols would be required to proactively approach the Securities and Exchange Commission (SEC) to declare that they are not securities.
This “reverse the catch-me-if-you-can” dynamic means a significant tightening of compliance burdens for early-stage projects.
The battle for stablecoin revenue
While the DeFi debate is largely ideological and technical, the battle for stablecoin returns has turned into a raucous battle for banking revenues.
The bipartisan talks highlighted that the regulatory treatment of stablecoin rewards, a crucial source of revenue for the crypto sector, remains an unresolved structural issue that will require significant discussion before a markup is feasible.
US banks have lobbied aggressively against allowing stablecoin issuers to pass on proceeds from reserves (such as government bonds) to holders. They argue that such a mechanism would divert deposits from the traditional banking system.
However, crypto companies have retreated, characterizing the banking lobby’s stance as protectionism rather than prudential concerns.
Coinbase Chief Policy Officer Faryar Shirzad argued that Congress effectively resolved the stablecoin issue with the GENIUS Act and that reopening the yield debate now creates unnecessary uncertainty that will jeopardize the future of the U.S. dollar as trading moves forward.
Shirzad framed the dispute in stark financial terms, pointing to data showing that U.S. banks make about $176 billion a year from the roughly $3 trillion they park at the Federal Reserve.
In addition, traditional financial companies earn an additional $187 billion annually in card scanning fees, which averages out to about $1,440 per household.
According to him:
“That’s over $360 billion a year in payments and deposits alone (and the enormous unused borrowing capacity that the Federal Reserve pays banks to leave sitting in a drawer somewhere).”
He pointed out that stablecoin rewards threaten these margins by introducing real competition into payments. He added:
“The data is clear and does not support the banks’ position. This summer, Charles River Associates found no statistically significant relationship between USDC growth and community bank deposits. Different users, different use cases – and people don’t view stablecoins as replacements for bank deposits.”
This sentiment was echoed by Alexander Grieve, the vice president of government affairs at venture capital firm Paradigm.
Grieve noted that bank lobbying organizations are characterizing the granting of interest-bearing stablecoins as an “extinction-level event” for their members.
“The funny thing is that’s not the case,” Grieve said, citing a December study that found stablecoins actually help create credit.
He added:
“The most ironic thing about this whole situation is that the so-called unsustainable status quo of GENIUS… THE STATUS QUO WILL REMAIN IF THE BANKS BLOW UP THE MARKET STRUCTURE!”
Institutional ambitions
The urgency of crypto lobby groups rests on the core assumption that these regulatory knots will unravel into bank-quality standards that favor incumbents.
For major U.S. crypto companies, the Clarity Act is less about avoiding lawsuits and more about unlocking institutional business models currently bogged down by regulatory opacity.
Reece Merrick, senior executive at Ripple, highlighted this operational bottleneck. He stated:
“The US continues to lack comprehensive regulatory clarity for the broader crypto ecosystem, which continues to prevent US-based entities from fully thriving and innovating in this space.”
He noted that his company is “actively advocating for better, more thoughtful frameworks to level the playing field and fuel the next phase of growth,” expressing optimism that the Clarity Act could provide that near-term certainty.
This position is consistent with Ripple’s aggressive moves to integrate itself into the traditional financial system. The company has a U.S. national bank charter and is pursuing access to the Federal Reserve, coupled with its RLUSD stablecoin reserves and settlement ambitions, moves that require a federally regulated environment in order to function.
This institutional pivot was further strengthened by Ripple’s recent purchase of prime broker Hidden Road, a platform that unlocks approximately $3 trillion annually for more than 300 clients.
The deal signals a strategic focus on workflows that rely on custody, collateral separation, and audit-ready operational controls, functions that would be difficult to offer at scale without the federal capabilities the Clarity Act aims to provide.
Coinbase CEO Brian Armstrong provided a similar assessment of the bill’s potential economic impact, saying:
“This bill will further unlock crypto in the US with clear rules, which will benefit all businesses, protect customers and unleash builders.”
Global pressure
As the Senate debates markup dates and sanctions language, the broader argument for passing the bill shifts from crypto-specific sentiment to harsh tax realities and global competition.
Domestically, proponents are increasingly linking the structure of the crypto market to the health of government finances. Research from the Brookings Institution has linked the growth of stablecoins to demand for short-term government bonds, creating a non-bank buyer base for U.S. debt.
A 2025 paper estimated that a 1% increase in demand for stablecoins could reduce yields on short-term government bonds by roughly 1 to 2 basis points, a quantifiable channel that makes the size of stablecoins a consideration for the Treasury Department.
Internationally, the costs of delay are becoming tangible as global competitors shift into execution mode.
For context, the European Markets in Crypto-Assets (MiCA) regulations already set a licensing benchmark for the internal market, with the European Securities and Markets Authority (ESMA) publishing detailed implementation templates that provide companies with a clear roadmap for compliance.
In Asia, hubs like Hong Kong and Singapore are working on rules specifically designed to tap into the liquidity that U.S. companies want to obtain onshore.
Senator Cynthia Lummis, an advocate for the legislation, highlighted this jurisdictional arbitration as a key driver of the January 15 push. She stated:
“For too long, unclear regulations have pushed digital asset companies abroad. Our market structure legislation changes that by establishing clear jurisdiction and strong protections and ensuring America leads the way.”