The US Senate returned from recess with the Digital Asset Clarity Act as the top legislative priority, featuring a provision that prohibits the Federal Reserve from issuing a retail Central Bank Digital Currency without explicit Congressional authorization. The Senate Banking Committee approved the bill 15-9 in May, and the Agriculture Committee cleared it in January, following House passage in July 2025. The prohibition removes the Federal Reserve as a potential competitor to private stablecoin issuers Circle (USDC) and Tether (USDT), which collectively account for the overwhelming majority of global stablecoin trading volume. The legislation follows the GENIUS Act stablecoin licensing framework signed into law in July 2025, establishing the regulatory architecture that determines control of digital payment rails.
Senate Banking Committee Approves Clarity Act 15-9 in May
The Senate Banking Committee approved the Digital Asset Clarity Act by a 15-9 vote in May. The Senate Agriculture Committee cleared the bill in January. The House of Representatives passed the legislation in July 2025. Senators must now consolidate both committee versions into a single package. Some senators project a floor vote by August. The 2026 midterm campaign window hardens in Q1 next year. White House crypto adviser Patrick Witt set an Independence Day target in May.
Bill Prohibits Federal Reserve Retail CBDC Without Congressional Authorization
The Clarity Act prohibits the Federal Reserve from unilaterally issuing a retail CBDC without explicit Congressional authorization. The provision requires legislative action, not regulatory rulemaking, before any digital dollar can reach consumers. The prohibition creates a statutory wall that private stablecoin issuers cannot build for themselves. The Senate needs 60 votes to pass the bill. Republicans must secure at least seven Democratic or independent votes on the floor. The current negotiation over ethics provisions determines whether the legislation moves forward.
Circle and Tether Dominate Stablecoin Trading Volume Globally
USDT and USDC collectively account for the overwhelming majority of stablecoin trading volume and on-chain liquidity globally. Circle has pursued MiCA compliance in Europe and operates under a licensed framework positioning USDC as the institutionally acceptable stablecoin for regulated entities. Tether operates at scale with USDT dominating offshore and emerging-market liquidity but carries more regulatory exposure in jurisdictions demanding audited reserves and formal licensing. The Clarity Act's Senate Banking version retains language allowing yield or rewards on stablecoins used in payments or on-chain activities. JPMorgan CEO Jamie Dimon objects to the yield provision, arguing it allows crypto companies to pay interest on stablecoin balances in a way that competes directly with bank deposits.
Treasury Department Closed Public Comment Period Tuesday
The US Treasury Department, FDIC, FinCEN, and the Office of Foreign Assets Control closed their public comment period Tuesday on stablecoin regulation under the GENIUS Act framework. The rulemaking timeline will shape how the Clarity Act's provisions translate into operational requirements for issuers. The two frameworks are interlocked. The GENIUS Act established the licensing framework. The Clarity Act is the architecture that determines who dominates the payments rails underneath it.
FAQ
What did the Senate Banking Committee do in May regarding the Clarity Act?
The Senate Banking Committee approved the Digital Asset Clarity Act by a 15-9 vote in May. The bill prohibits the Federal Reserve from issuing a retail CBDC without explicit Congressional authorization.
Why does the Clarity Act require 60 Senate votes for passage?
The Senate needs 60 votes to pass the bill, meaning Republicans must secure at least seven Democratic or independent votes on the floor. The current negotiation over ethics provisions determines whether the legislation moves forward.
When did the Treasury Department close its public comment period on stablecoin regulation?
The US Treasury Department, FDIC, FinCEN, and the Office of Foreign Assets Control closed their public comment period Tuesday on stablecoin regulation under the GENIUS Act framework.
