Senate Democrats to Send CLARITY Act Counterproposal Ahead of Tomorrow’s Cloture Vote

Senate Democrats are reportedly preparing a counterproposal on the CLARITY Act as they are unsatisfied with the latest text of the crypto bill. This comes ahead of tomorrow’s cloture vote, with it still being unclear whether the Republicans have the required 60 votes to clear this major procedural hurdle.

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Senate Democrats To Send CLARITY Act Counterproposal

According to a Politico report, Democrats are preparing a counterproposal to the latest text of the crypto bill just ahead of the cloture vote scheduled for 2:15 pm tomorrow. Senator Ruben Gallego, who has been negotiating on the crypto bill for a while, is leading the charge with the counterproposal, and it now follows a meeting which they held with Senate Minority Leader Chuck Schumer earlier today.

As CoinGape reported earlier today, President Trump agreed to the ethics provision in the final CLARITY Act text, which Senate Republicans released on Sunday evening. The text also included compromises on other areas which Democrats had pushed on, with the inclusion of a ‘circuit breaker’ clause to address deposit flight concerns.

However, Democrats are still unsatisfied with the final text, especially as it relates to the ethics provision. Some of these Democrats, including Senator Mark Warner and Gallego, have reportedly said the ethics language in the final text is insufficient, even though it enables state Attorneys General to enforce the provision.

A coalition of Attorneys General led by New York’s AG Letitia James has also opposed the latest CLARITY Act text. They continue to argue that the crypto bill will make it harder for states to take action against crypto fraud. Banking groups have also pushed back on the circuit breaker language, arguing that it is not a safeguard against their deposit flight risk concerns.

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Senator Gillibrand Pushing For Votes To Advance Bill

Democratic Senator Kirsten Gillibrand is reportedly pushing for her colleagues to vote to advance the CLARITY Act tomorrow despite Democrats’ reservations about the final text. Gillibrand, however, faces strong opposition from senators such as Elizabeth Warren, who are actively pushing Democrats to vote against the bill.

Punchbowl’s Brendan Pedersen said earlier today that Warren’s staff were circulating points against the ethics provision, arguing that the state AG’s powers to enforce it are a mirage. They argued that the DOJ is still the only one with real power to enforce the ethics provision and that it is unlikely to take action unless the White House clears it.

Meanwhile, some Republicans appear undecided on whether they will vote in favor of the CLARITY Act tomorrow. This includes Senators Susan Collins and John Cornyn, who cited concerns from banking groups about the deposit-flight risk posed by stablecoin yields. However, Republican Senator Cynthia Lummis has warned that it is now or never as they look to get the crypto bill across the finish line.

The Senate will still need to hold a final passage vote if the cloture vote passes tomorrow with the 60-vote threshold. However, the final passage of the CLARITY Act will need only a simple majority, which Republicans can secure across party lines with Senator Mitch McConnell back after a three-month absence.