Senate races to advance crypto legislation in July as housing bill turmoil threatens timeline

A sweeping cryptocurrency bill faces a narrowing path to passage as pressure grows on the Senate to take up the legislation next month.

The Senate's to-do list over the next few weeks is overflowing with priorities, from the annual defense authorization bill and renewal of the farm bill to revisiting a major housing package after President Donald Trump said on Wednesday he would not support it unless Congress first passes legislation requiring proof of citizenship to vote in federal elections. The housing bill also includes a provision to ban central bank digital currencies.

Time is running out to vote on those bills before lawmakers leave Washington for the August recess. When they return, the focus will shift to the November elections.

That leaves crypto legislation competing for limited floor time.

On Wednesday on Fox Business, Sen. Cynthia Lummis, R-Wyo., a key negotiator in talks to pass the broad crypto bill, said she expects a Senate vote next month.

"We're finally to the point where we're going to put out text over July 4 and give people one last really good look through the bill, and then we're moving in July," Lummis said.

The Clarity Act is high up on the list for July, a Senate aide told The Block.

"Clarity will be a top priority for Democrats and Republicans when the Senate returns in July," the aide said.

Over the past year, senators have spent months negotiating a crypto market structure bill that would create the industry's first comprehensive federal regulatory framework, dividing oversight between the SEC and CFTC while giving the latter primary authority over most digital assets.

The House passed its version of the Clarity Act almost a year ago, sending it to the Senate, which decided to take up its own version. The bill needed to pass through both the Senate Agriculture Committee and the Senate Banking Committee, which eventually happened, teeing it up for a full Senate vote.

However, last month, when the bill was passed out of the banking panel, key Democrats voted yes, but said an ethics provision that would block the president, vice president, lawmakers, and other federal officials from making certain financial transactions involving digital assets would need to be included. Democrats have repeatedly criticized President Donald Trump and his family's foray into crypto, including through World Liberty Financial, which has so far made his family over a billion dollars.

That also comes as more pressure has intensified to make changes to a section of the bill that creates a safe harbor for non-custodial developers, clarifying that they are not money transmitters. Many in the crypto industry strongly support the measure, saying it provides much-needed legal certainty for software developers and helps prevent innovation from moving offshore.

Meanwhile, law enforcement says it could hinder their efforts to investigate and prosecute crypto-related crimes. And recently, leaders of the Catholic church have also weighed in over concerns that it could weaken safeguards designed to combat human trafficking.

"I don't see how there could be anything by July 4," a Senate staffer told The Block this week. "But maybe they know something we don't."

A crypto industry source said momentum in July would be "very challenging at this moment."

"The level of concern from the industry and other participants, including folks on the Hill, is that we're losing this window, and that this moment is disappearing very, very quickly if we can't get this done literally in the next couple of weeks," they added. 

The source said conversations now seem to be pivoting towards getting a bill done during the lame duck session — the time period between the November election and when new lawmakers come in January. They added that getting a Senate floor vote in July is the "last kind of moment" before the House then goes on its August recess. 

On Thursday, Senate Majority Leader John Thune told Semafor that there are still issues to resolve and that there is a path forward, but they are "running out of time."

Key negotiators, including Sens. Lummis, Kirsten Gillibrand, D-N.Y., and Senate Minority Leader Chuck Schumer, D-N.Y., did not respond to a request for comment for the story.

Where the issues stand

This week, in an interview with 535 News, Sen. Angela Alsobrooks, D-Md., another key negotiator, said she would not support a bill on the Senate floor if it did not address ethics or illicit finance, but voiced optimism.

"We have to have language on ethics," Alsobrooks said. "We have to have language on illicit finance, which by the way is good for everyone involved, good for the banks, good for the crypto companies and good for the American people. I think we can do it."

Alsobrooks said negotiators are "close" to reaching an agreement on the illicit finance provisions.

Lawmakers have also made progress on other sticking points. One issue that appears to have been resolved is the treatment of stablecoin rewards, which earlier this year derailed a Senate Banking Committee vote on the Clarity Act after Coinbase withdrew its support.

Banks have said they are concerned that rewards will draw deposits away from traditional banks, while crypto firms say that restricting those rewards would hamper innovation.

Sens. Alsobrooks and Thom Tillis, R-N.C., finalized a compromise last month on that issue. 

But bank groups aren't giving up. Last month, a community bank group launched a new ad campaign targeting stablecoin reward language. This week, the American Bankers Association put out ads in Politico's Morning Money newsletter urging lawmakers to "close the stablecoin loophole."

JPMorgan CEO Jamie Dimon is also not too happy. He told Fox Business last month that he and other banks plan to oppose the bill in its current form.

Timing, timing, timing

Trump's move not to sign the bipartisan housing bill on Wednesday did not help the Clarity Act's cause.

That showed that nothing is guaranteed, the crypto industry source said.

"It just adds another layer of uncertainty — when talking to Democrats, it's sort of like no deal is sacred kind of philosophy that they think whatever deal that they make, good deal, bad deal, doesn't really matter because the president could just blow it up at any moment," they said. 

"The level of trust still is pretty low," the source added. "There's also a bit of fatigue, and everyone just wants to get to the finish line finally." 

If a bill is not passed this year, it will get a restart in January, when Democrats have a good chance of winning back the House.  

Rather than speculate on how the legislation might change under Democratic control next year, Alsobrooks argued that Congress should finalize the bill now because crypto is already entering the mainstream.

"It's important to get it done now, and I think it's important to get it done because again, it's happening," she told 535. 

Mark Hays, associate director for cryptocurrency and financial technology with Americans for Financial Reform and Demand Progress, has concerns about the bill's treatment of tokenized assets and DeFi and risks there, as well as Trump's conflicts of interest. It would be better to reset the clock for the next Congress, he told The Block.

The Senate's to-do list includes the passage of the Farm bill, which is renewed every five years and addresses food assistance, agricultural research, nutrition programs and more. It impacts more people than the Clarity Act does, Hays said.

"Contrary to industry rhetoric here, most Americans don't consider a crypto bill their top priority," Hays said. "But things like the Farm bill impact a lot of people, whether you're making food or eating food."

"The question for Congress is, are you going to focus on key priorities and use your limited remaining time to get that done, or are we going to focus on this sort of niche issue being driven by some wealthy interests that if done poorly could have really longstanding impacts on the financial system without real benefits," he added.

Crypto bill 'within reach'

Blockchain Association CEO Summer Mersinger said issues around ethics and combining both versions of the Clarity Act in the Senate Banking Committee and Senate Agriculture Committee are "active, serious and solvable."

"A July vote should remain the goal – and is, in my view, absolutely achievable," Mersinger said in a statement. "Unrelated fights consuming Senate floor time may complicate the calendar, but they should not derail a market structure bill that has been years in the making and is essential to protecting consumers, keeping digital asset innovation in the United States, and giving responsible companies clear rules of the road.” 

The Digital Chamber CEO Cody Carbone held a similar sentiment and said he was encouraged by the idea of a bill getting passed in the Senate in July.

"Digital Chamber continues to support the careful, quiet work underway to reconcile the bills that cleared the Senate committee and build a single framework with fair, durable rules for digital assets," he said. "A market structure bill remains within reach, and now is not the time to be discouraged."