Crypto Industry Pressure Repeatedly Undid Bipartisan Deals, Helping Sink CLARITY Act in Senate

A U.S. market-structure bill for the cryptocurrency industry, the CLARITY Act, was derailed in the Senate in part because sustained pressure from the crypto sector repeatedly unraveled bipartisan agreements, according to a report.

Punchbowl News reporter Brendan Pedersen wrote on X on Sept. 20 that interviews with more than 12 congressional aides involved in the legislation pointed to flawed negotiations, wasted time and excessive pressure from the crypto industry as key reasons the bill failed.

According to Punchbowl News, Democrats and Republicans spent thousands of hours negotiating the bill beginning in September last year. But even after the two sides reached agreements in principle in private talks or worked out specific legislative language, those terms were repeatedly revised when the industry objected.

Several bipartisan aides said Republicans at times backed away from prior agreements or substantially changed provisions because of industry opposition. In negotiations over ethics rules for public officials related to crypto, a proposal that would have given state attorneys general enforcement authority was also withdrawn.

Democrats grew distrustful during the talks, believing Republicans could not refuse demands from the crypto industry, the report said. As negotiations dragged on, the CLARITY Act draft expanded by hundreds of pages. Republicans, meanwhile, argued that industry views needed to be reflected because top executives at major crypto companies were influential enough to communicate directly with the White House.

Real-time pressure from the industry also complicated negotiations. Democratic aides who presented positions in closed-door bipartisan meetings sometimes received a barrage of complaints from crypto lobbyists before the meetings had even ended.

Aides specifically cited pressure from Coinbase and venture capital firm a16z. Industry participants disputed that account, saying negotiations were complicated by the Senate's sweeping revisions to the CLARITY Act after it had passed the House. They also said the industry had made significant concessions over the past year, including accepting substantive limits on stablecoin rewards.