Senate-reported CLARITY Act outlines broad crypto powers for U.S. banks

The analysis, published September 30, highlights a significant shift in regulatory scope. Unlike the House-passed version of the bill, which restricts digital asset activity to existing legal frameworks and nonbank subsidiaries, the Senate-reported text would permit these functions across all banking organizations and credit unions. By removing the distinction between core banking business and activities deemed financial in nature, the bill would theoretically allow banks to hold assets like Bitcoin directly—a prospect Senator Cynthia Lummis suggests could trigger significant price volatility.

Legislative momentum remains gridlocked. On September 15, the Senate failed to reach the 60-vote threshold required to proceed with H.R. 3633, with a 49-50 vote outcome. Despite this, opponents have signaled that negotiations are ongoing. Meanwhile, banking industry associations continue to push back against stablecoin reward provisions, fearing that interest-like incentives could drain deposits from lenders. This tension is mirrored by 17 state attorneys general who have raised concerns that the legislation might undermine state-level securities enforcement and fraud prevention efforts.

While the CLARITY Act remains in limbo, the Federal Reserve is moving forward with the GENIUS Act, which creates a federal framework for payment stablecoins. Recent Fed proposals mandate that issuers back stablecoins with liquid assets like Treasury bills and establish rigorous application processes for banks seeking to issue tokens. For industry participants, these regulatory shifts do not alter existing obligations; Fernando Castellanos of Prove emphasized that firms remain bound by Bank Secrecy Act requirements, regardless of the status of new market-structure legislation.