The future of the Digital Asset Market Clarity Act (CLARITY) remains uncertain, as the US Senate Banking Committee has indefinitely postponed its markup. This delay has prompted leaders in decentralized finance (DeFi) to express their concerns and urge lawmakers to address issues within the bill.
Initially scheduled for discussion, the markup was halted by Republican leaders on the committee. This postponement follows apprehensions from crypto industry groups about the bill's implications for tokenized equities, stablecoin rewards, and their effects on DeFi platforms. The DeFi Education Fund highlighted on Wednesday that certain proposed amendments might significantly harm DeFi technology, potentially worsening market structure legislation for software developers.
Crypto venture capitalists have echoed these sentiments, advocating for amendments to the bill to better protect DeFi and developers. Alexander Grieve, vice president of government affairs at crypto investment firm Paradigm, emphasized the need for substantial revisions to safeguard developers and DeFi. Meanwhile, Jake Chervinsky, chief legal officer at Variant, pointed out that the bill fails to meet necessary standards, with particular ambiguity around requirements for developers and infrastructure providers related to Know Your Customer (KYC) regulations and SEC registration.
The CLARITY Act has faced multiple delays due to ongoing debates among lawmakers regarding DeFi, potential conflicts of interest, and stablecoin regulations. Most recently, Tim Scott, chair of the Senate Banking Committee, announced a temporary pause after Coinbase CEO Brian Armstrong voiced opposition to the bill in its current form.
The core issue regarding DeFi in the legislation revolves around potential restrictions that could drive companies to relocate outside the US. Unlike banks lobbying for a ban on interest-bearing stablecoins, many industry advocates, including Armstrong, argue that the bill could curtail DeFi activities. Cody Carbone, CEO of the crypto advocacy group The Digital Chamber, expressed optimism that the DeFi-related concerns could be addressed in upcoming discussions.
Todd Phillips, an assistant professor at Georgia State University's Robinson College of Business, noted that DeFi and crypto developers prioritize a robust market structure over concerns about yield. Their main interest lies in fostering a thriving crypto market, not in where customers store their funds.
Despite some Senate Democrats expressing worries about DeFi platforms potentially facilitating illicit transactions, no new date for the markup has been set. The ongoing discussions highlight the need for careful consideration of DeFi's future within the legislative framework.