CLARITY Act Could Unlock 11 Crypto Activities for US Banks Under Senate Plan
A Congressional Research Service report outlines how the Senate version of the CLARITY Act could unlock 11 digital asset operations for US banks and credit unions, despite the bill stalling in the Senate.
A report from the Congressional Research Service outlines the new opportunities the CLARITY Act could unlock for American lenders, following its reporting by the Senate and passage by the House as H.R. 3633.
Published on September 30, the Congressional Research Service report details 11 distinct digital asset operations that could become accessible to US financial institutions, including trading and underwriting digital assets.
According to the CRS, the Senate proposal would permit credit unions and banking companies to engage in specific activities without needing to maintain the traditional separation between insured depository institutions and their commonly owned subsidiaries. Several of these authorized actions are currently barred for banks.
Read More: CLARITY Act Stalls in Senate as Lummis Blames Democrats for Failed Crypto Vote
Under existing regulations, banks are restricted to underwriting and trading only a limited class of securities. The Senate-proposed text would expand these capabilities, allowing financial institutions and credit unions to handle a broader array of digital assets.
House and Senate CLARITY Act Versions Take Different Paths
In contrast, the House legislation is narrower in scope. It would primarily allow banks to integrate blockchain and other distributed ledger technologies into their pre-existing operations. Other cryptocurrency-related activities would instead be permitted exclusively through nonbank subsidiaries belonging to financial holding companies.
The version passed by the Senate, however, clears the way for 11 specific activities across both banks and credit unions. The CRS points out that the Senate bill removes the traditional legal boundaries separating the “business of banking” from activities defined as “financial in nature.”
Senator Cynthia Lummis has argued that the legislation would give US banks the ability to purchase and hold Bitcoin, thereby driving up demand for the asset. These forecasts regarding potential increases in the price of Bitcoin remain speculative.
On September 15, the Senate did not advance H.R. 3633 for formal consideration after a cloture vote of 49-50 fell short of the 60-vote threshold required to proceed. While this vote did not constitute a final rejection of the measure, senators have indicated that further discussions regarding the bill remain possible.
Stablecoin Rules Advance as Crypto Market Structure Remains Unsettled
Discussions around the bill included heavy debate over stablecoin rewards. Banking associations voiced concerns that these rewards function similarly to interest payments on bank deposits, warning they could draw capital away from traditional bank deposits and loans. Additionally, state attorneys general opposed the legislation, arguing it might infringe upon state-level authority over securities regulation.
Meanwhile, the Federal Reserve is proceeding with the implementation of the new GENIUS Act. In a proposal issued on September 24, the Fed outlined regulatory frameworks that would mandate reserve-backed support for payment stablecoins operating under regulatory supervision.
Under the proposal, permissible reserves for payment stablecoins would include short-term Treasury bills and other high-quality liquid assets. Additional standards proposed for payment stablecoins cover strict risk-management and capital requirements.
A separate proposal introduced by the Fed establishes a formal application pathway for supervised bank holding companies seeking authorization for their affiliates or subsidiaries to issue payment stablecoins. Submissions would require detailed business documentation alongside other records. The framework also incorporates protocols for appeals and formal determinations.
Read More: CLARITY Act Stalls. Paul Atkins and Michael Selig Move Ahead With New Crypto Rules
The current legislative stall surrounding the CLARITY Act does not alter existing compliance obligations. Legitimate cryptocurrency entities must continue adhering to established requirements regarding the Bank Secrecy Act (BSA), customer identification, transaction monitoring, sanctions, and the reporting of suspicious activities.
Frequently Asked Questions
What is the CLARITY Act?
The CLARITY Act (passed by the House as H.R. 3633 and reviewed by the Senate) is a legislative proposal aimed at establishing clearer rules for digital assets and outlining how US lenders and financial institutions can engage with cryptocurrencies.
How do the House and Senate versions differ?
The House version is more restrictive, permitting banks to utilize blockchain technology for existing operations while limiting other crypto activities to nonbank subsidiaries. The Senate version goes further by enabling banks and credit unions to directly undertake 11 specific digital asset activities without traditional corporate separation boundaries.
Why did the CLARITY Act stall in the Senate?
The bill stalled on September 15 when a cloture vote yielded a 49-50 result, failing to reach the 60 votes required to move forward for official consideration.
What are the main concerns surrounding stablecoins in the legislation?
Banking groups worry that stablecoin rewards compete directly with traditional bank interest, which could drain bank deposits and loans. Furthermore, state attorneys general have argued the bill could undermine state-level oversight of securities.
Does the delay of the CLARITY Act change current crypto compliance rules?
No. Existing regulatory obligations remain fully in effect. Cryptocurrency businesses must continue to comply with the Bank Secrecy Act, transaction monitoring, customer identification, and suspicious activity reporting mandates.
Web3 PR Specialist | KOL | Blockchain Advocate | Digital Strategy Expert based in Moscow, Russia. Focused on Web3 communications, blockchain, digital strategy, and community growth.
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