Crypto advocates and community bankers are taking their fight over U.S. digital asset regulations directly to senators ahead of a key vote next week.
The Senate is scheduled to hold a procedural vote on the Clarity Act on Sept. 15. Reuters reported Wednesday that both sides targeted senators during the August recess. The legislation would establish federal rules for digital assets and divide oversight between two major financial regulators.
During the August recess, both sides targeted senators through meetings, local events, opinion pieces, phone calls, emails and advertising. Additionally, advocacy group Stand With Crypto said supporters contacted Congress nearly 50,000 times during August.
The group receives backing from Coinbase Global Inc. (NASDAQ: COIN) and says it represents approximately 3 million supporters. Members also organized local events and placed opinion pieces supporting the legislation in newspapers.
Meanwhile, Georgia chapter president Tia Williams met with staff representing Democratic Senator Raphael Warnock. Warnock previously voted against advancing the legislation from the Senate Banking Committee.
Crypto organizations have already spent at least USD$190 million ahead of November’s midterm elections. Furthermore, the Blockchain Association launched its Clarity for America campaign in July to connect supporters with senators.
“New ICBA polling demonstrates that small businesses understand firsthand the critical role of community banks in supporting local economies and want to ensure the Clarity Act does not harm this vital source of credit,” ICBA President and CEO Rebeca Romero Rainey said in a statement.
“ICBA continues to urge lawmakers to ensure the Clarity Act includes a robust prohibition on stablecoin yield to ensure community banks continue to power $4.1 trillion in total lending activity in local communities nationwide.”
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Clearer regulations would help industry operate domestically
Community banks are mounting their own lobbying campaign as lawmakers consider the legislation. The Independent Community Bankers of America has arranged meetings between local bankers and senators while running television advertisements seeking changes.
One major dispute involves rewards that cryptocurrency platforms can offer customers holding stablecoins. However, banking groups argue those rewards could pull customer deposits away from traditional financial institutions and weaken an important funding source.
Crypto companies argue platforms should retain stablecoin rewards and say clearer regulations would help the industry operate domestically. Additionally, lawmakers face disagreements involving money-laundering protections and proposed ethics restrictions covering government officials’ cryptocurrency interests.
The political fight comes after nearly three years of dramatic change for the U.S. cryptocurrency industry.
Bitcoin entered 2024 under regulatory pressure, although approval of spot Bitcoin exchange-traded funds opened the market to more institutional investors. Donald Trump’s election subsequently accelerated the industry’s political and regulatory shift.
Since his return to office, regulators have eased several restrictions, Congress has established federal rules for stablecoins and the government has created a strategic Bitcoin reserve. Meanwhile, lawmakers are attempting to settle the larger question of how Washington should regulate cryptocurrency markets through the Clarity Act.
