The crypto Clarity Act returns to the Senate this week. Banks are already trying to kill it.

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Talking about the liminal place and the endless ways that drive their people crazy: Today, we are going to Capitol Hill, where the Senate is, finally, finally reviewing the crypto market system bill called the Clarity Act. And that, of course, drives everyone crazy.

On Sunday, when crypto companies were about to take victory laps for the Clarity Act to return to the Senate, the American Bankers Association, one of the groups interested in financial companies in the world, sent an email that immediately ruined their Mother’s Day. Apologies to all the women who messaged them, Rob NicholsPresident and CEO of the ABA, asked CEOs via emailfrom Wall Street to community banks, drop everything and start talking to their Senators ASAP – “Please encourage your employees to do the same” – because the Clarity Act created a risk for their companies. “The current rules, although changed from the previous version, still do not prevent crypto companies from offering rewards as interest on payment stablecoins,” wrote Nichols, warning that if the “loophole” is not closed, customers will be encouraged to move their money to stablecoins, which will lead to a banking sector that will seriously disrupt banks.

Usually one sees Wall Street panicking in anticipation of legislation, but the Clarity Act, which is due to return to the Senate Banking Committee for a vote on Thursday, poses a major threat to traditional financial institutions – or, the tradition of “keeping money in bank accounts that pay interest to customers.” This is not a formal bill that addresses an issue that already exists in the regulated industry. This is the market composition bill – i.e., a comprehensive law that will direct the market in which stablecoins, or digital tokens pegged to the value of $1 USD, will be legally regulated. In fact, it is very important to the future of crypto that in January, before the Banking Committee of the Senate started a debate on the preparation of the bill, Coinbase, the largest US company in the market. he suddenly declared that it is not compatible with the Bible as it were, saying that the banks had rewritten it in a way that would destroy crypto in the long run and started months of angry discussions on the language of the bill. (As an industry observer explained to me at the time, one cannot pass a bill for the crypto market in the United States without the support of the largest crypto company in the country.)

The result of the crypto industry is that they all seem to be on the same page now. After months of negotiations held at the White House, organized by former special advisor on AI and crypto David Sacks and its leadership underlings, Coinbase came to cooperate with digital economy companies and major financial institutions represented at meetings. “The word ‘disagreement’ is more accurate,” he said Vassilis TziokasThe vice president of growth at the blockchain technology company Matter Labs, who was not in the discussion but scanned all 300-plus pages of the existing bill. As the language currently stands, the currency does not allow stablecoins to pay interest – but it doesn’t. avoid they by providing produce, perhaps. It’s enough of a legal window for crypto companies to offer service-based rewards for purchases, similar to how credit cards can redeem things like flights. “The current wording of the Clarity Act is good for the law firm, because once Clarity becomes law, it will be up to lawyers to define what ‘performance-based compensation’ means,” Tziokas said.

The creative expression seems to have made everyone in the room uncomfortable andhappy – especially since the administration has made it clear that the development of the crypto market is a priority for them, wanting the bill to be on Trump’s desk by July 4. “For people who have been in it all the time, it’s confusing #150,” he joked Peter SmithCEO of Blockchain.comwhose team has been in contact with all the players involved in planning and negotiation.

But now that there are words on paper, and those words are in front of the Senate Banking Committee, which manages securities, it seems that every major crypto player and TradFi partners are flying in DC for the last minute backchanneling, lobbying, and leaking to destroy the opponents of the investigation to the reporters Capitol Hill, before the committee’s gathering of the token on Thursday. The committee process is one of the best and last chances to change the law before it is taken to a full vote, and committee members can still be swayed. The process persuading those senators, however, is difficult.

Clarity’s public-facing opposition comes from community banks — not the monoliths on Wall Street, but small operations that support counties, counties, and towns. While the big bank JPMorgan Chase can handle customers moving their money to stablecoins, these smaller banks will be threatened. But these small banks are also political lobbyists who can exert more pressure on their elected officials than a large national bank can. Sen. Katie Britt (R-AL) has been seeing a lot of trouble on that front. On a more serious level, too Sen. Thom Tillis (R-NC), whose state is home to several major banks, including the headquarters of Bank of America.

The second area of ​​opposition: the big banks, which are also members of trade unions such as community banks. Their concern is the loss of people who are more affluent than ordinary consumers: If their wealthy customers decide that stablecoin wallets and companies can give them a higher return on investment, perhaps because of the yield of interest or a reward program, they will eventually decide to transfer their money to banks. (Wall Street’s biggest bank won’t benefit from the controversy, but don’t expect to see JPMorgan Chase in contention.)

So there is Donald Trump everything. Democrats who oppose the Clarity Act point to the lack of an ethics policy that would prevent government officials, including lawmakers, from profiting from crypto interests while in office. That group will include Trump, whose family has investments in several crypto companies. “This bill puts investors, our national security and our entire financial system at risk – and it will undermine Donald Trump’s crypto-corruption campaign,” he said. Sen. Elizabeth Warren (D-MA), an outspoken critic of the crypto industry and a member of the Senate Banking Committee. “In just one year in office, the President and his family amassed at least $1.4 billion in crypto transactions alone, yet this amount includes zero restrictions.”

And that’s it there are real backchannel discussions, where things get complicated. “The interesting development of the last minute is that it seems to be of a different kind housing bill it was put into the Clarity Act itself,” he said Sam Lymandirector of research at the Bitcoin Policy Institute, which has been closely following the security bill for open source software developers.

According to Lyman, the agreement, A federal program to provide financing for housing projects called the Build Now Act which was given at the very end of the work, seems to have been given to Sen. Warren is Sen. John Kennedy (R-LA). “The first thing is, it raises bipartisanship, if you’re getting legislative language sponsored by a prominent Republican and a prominent Democrat,” Lyman said. “It also makes Senator Kennedy a strong supporter of the bill because he was one of the few Republicans who dragged his feet on the Clarity Act.

In the meantime, public kayfabe continues to play out, mostly surprisingly. Key statistics of crypto policy and meet ABA at X. Coinbase’s CEO Policy Brian Armstrong it’s starting to leakbut the only parts that make him look like he favors Republicans instead of Democrats. The crypto community has been buzzing for the past day paper written by Bill Nelsondirector of research at the Bank Policy Institute, by misrepresenting important statistics from a Cornell professor’s research on the digital economy, and to say that Nelson used AI to write. (Cornell Professor, Lin William Cong, detailed Nelson’s blog post.)

And the most ridiculous moment, as Lyman said, was the surprise of Warren, the great anti-banker, somehow coming to their side in this fight.

He said: “I think it’s really amazing that no one sees it.”

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