Crypto outgrew the culture war years ago. Today’s Senate markup of the CLARITY Act tests whether Washington has, too.
Today, the bipartisan CLARITY Act gets its Senate markup treatment. This should put the bill into final form for what should be enough votes to pass by July 4. CLARITY changes the entire federal securities law system to account for digital assets or “crypto.”
Digital assets have grown into a mature financial system. Federal regulators have treated crypto like a political football, punted between administrations as SEC chairs switched sides.
Cryptocurrency regulation preferences are politically correlated. Republicans see growth opportunities magnified. Progressives see predatory finance scaled up. Current crypto law is a Rorschach test, and each side sees what it brought to the inkblot.
Why are people so worked up about securities regulation? Stablecoins now settle billions of dollars in transactions daily. Tokenized U.S. Treasury securities are woven into mainstream institutional portfolios. The user base that was once dominated by cypherpunks and ideological early-adopters now includes payment processors, corporate treasurers, and ordinary retirees looking for yield in a world of mediocre savings rates.
Crypto’s cultural valence never caught up with the financial reality. Politicizing continues even as digital assets become major markets.
The Senate Banking Committee’s markup of the CLARITY Act today is a test of something specific: whether Congress can see past the cultural projections on crypto and legislate their economic reality.
When a market grows up and starts moving a trillion dollars, a serious legislature writes a principled rulebook. That is CLARITY. Congress writing that rulebook itself signals a legislature that can move past the symbolic fight, begging the question, is this the end of culture-war finance?
In the 1970s, money market funds emerged as competitors to bank deposits, offering higher yields backed by safe commercial paper. The fight over them was ideologically charged, pitting consumer advocates and free-market economists against an entrenched banking establishment. Congress eventually resolved it with regulation, writing rules that treated money market funds as the financial products they were. Now nobody thinks money market funds are immoral.
Sen. Elizabeth Warren (D., Mass.) demonstrated how not to end a culture war by filing at least 44 of the more than 137 amendments submitted for CLARITY. Several have nothing to do with digital asset markets, including capping credit-card interest rates or demanding bank supervisory records related to Jeffrey Epstein. Appending those to a market-structure bill is projection.
The CLARITY Act is not a perfect bill. But each time the legislature writes a serious rule for a serious market, it lays a brick in the wall between symbol and substance.
Today’s amendments will divide into two kinds: those that try to make CLARITY a better digital-asset law, and those that imagine it stands for something else. The ratio is the measure of where American financial politics now stands.
Seth C. Oranburg is a Professor of Law at the University of New Hampshire Franklin Pierce School of Law, where he studies financial regulation and digital asset markets.
