CLARITY Act meets Groundhog Day as crypto’s Washington fight runs into the clock
Congress keeps promising clarity on crypto, then immediately tripping over the fine print. The CLARITY Act is still alive, but it is running into the same old Washington problem: too many unresolved fights, too little time, and lawmakers who are only half awake to the consequences.
- CLARITY still has loose ends. Ethics, illicit finance, prediction markets, and stablecoin rewards are still in dispute.
- Crypto tax relief is meeting resistance. Industry groups want HR 9175 advanced; bankers say it gives crypto an unfair break.
- PAC money is everywhere, but it is not magic. Crypto-aligned groups are spending heavily in primaries, yet big spending has not produced automatic wins.
- The “crypto voter” is real-ish, not mythical. Pew shows crypto use is leaning more Republican, but public sentiment remains skeptical.
The Senate’s final week of work before adjournment is underway, and then lawmakers are gone until July 13. After that comes the traditional August recess, which stretches until September 13. That leaves a narrow window before election-season gravity starts dragging Congress into full campaign mode. For a market-structure bill as technical and politically loaded as CLARITY, that is not a comfortable calendar.
CLARITY is the industry’s big push to define how digital assets are regulated in the U.S. In plain English, it is a fight over who supervises what, where the SEC stops, where the CFTC starts, and how much room crypto businesses get to operate without being treated like regulatory pinatas.
The bill still has several unresolved issues. The list includes the “ethics” issue, the “illicit finance” issue, a demand from commercial and tribal gaming operators for a ban on prediction markets offering sports bets without state gaming licenses, and whether crypto platforms can offer “rewards” tied to certain stablecoin-based activities.
That stablecoin rewards question is the one that keeps coming back like a bad sequel. Stablecoins are crypto tokens designed to track something like the U.S. dollar, and “rewards” can mean incentives or yield-like benefits for holding or using them. That is where the policy fight gets messy: are these just product features, or are they bank-like yield products wearing a crypto hoodie?
According to Eleanor Terrett, that issue remains “very much in play.”
Senate Agriculture Committee chair John Boozman captured the underlying problem bluntly when he told Punchbowl News:
“one of the issues that we have is, a lot of members don’t understand it. In fact, I would say most members don’t.”
That is not exactly a ringing endorsement for legislative speed. It is what happens when a bill combines banking law, securities law, commodities law, and crypto jargon that would make normal people reach for the aspirin.
The Digital Chamber is trying to keep pressure on with a “member fly-in” to Washington, D.C., on June 23, and Cynthia Lummis has issued 10 “pass CLARITY now” tweets in the past seven days. That is a lot of hustle for a bill that still needs more policy agreement than social-media enthusiasm.
There is also the anti-CBDC front. The Senate approved the 21st Century ROAD to Housing Act on Monday, and it includes language prohibiting the Federal Reserve from issuing a central bank digital currency, or CBDC, before January 1, 2031. A CBDC would be a digital dollar issued directly by the Fed. Supporters of the ban argue it could open the door to financial surveillance. Critics say that fear is overblown and more useful as a political weapon than a policy analysis.
The House may try to make that prohibition permanent, but that would send the bill back to the Senate and reopen the whole fight. In Washington, “solved” usually just means “delayed until the next round.”
On taxes, the industry wants another win: HR 9175, the Tax Clarity for Mining and Staking Act. The CEOs of the Blockchain Association, Crypto Council for Innovation, and The Digital Chamber signed a joint letter on Monday urging House Ways & Means to move the bill “as introduced.”
The basic pitch is straightforward. Mining rewards, the newly created tokens paid to block reward miners for securing a network, and staking rewards on proof-of-stake networks like Ethereum can trigger tax liability when they are received. HR 9175 would change the timing so those tokens are not taxed immediately upon receipt, but instead when they are sold. That matters because tokens can be illiquid when they are created. Taxing them before they are sold can force miners and stakers to sell part of their holdings just to cover the bill.
That is a legitimate business problem. Cash flow matters, and tax rules that ignore liquidity can be stupid in a hurry.
But the banking lobby is not crying wolf for no reason either. The American Banking Association says the proposal shows “clear favoritism for cryptocurrencies over other asset classes” and gives tokens “a significant advantage over nearly every other way Americans save, invest and earn returns today.”
The ABA’s core argument is that if bank interest and dividends are taxed annually, crypto should not get a special rule that makes mining and staking rewards easier to defer. The group also warns that legislative favoritism toward crypto-yield products could shift capital away from the banking system and hurt community lending, small businesses, and broader economic development.
That is classic bank-lobby language, yes, but it is not nonsense. If Congress gives one asset class a better tax treatment, capital will chase the carrot. Markets are not sentimental.
House Ways & Means debated seven crypto tax bills last week, so HR 9175 is still part of a larger fight rather than a clean standalone win. The industry wants an “as introduced” approval. Democrats and banking groups may have other ideas. That is usually where “simple tax clarity” turns into “Congressional swamp sludge.”
Then there is the money race, where crypto-aligned PACs keep showing up like they’ve discovered a new religion: spending money on politicians.
In Maryland, Steny Hoyer is retiring and Adrian Boafo is expected to win the seat. Protect Progress, a Democratic-focused offshoot of Fairshake, is spending $5.5 million supporting Boafo. Senator Chris Van Hollen warned voters to
“understand that the organizations running the ads have their own special interests at heart, not the public interests, not the interests of the people of Maryland’s 5th Congressional District.”
Boafo called that line of attack “extremely insulting.” He also co-sponsored pro-blockchain legislation in Maryland this spring, including language that would stop the state from cracking down on digital asset staking. The Blockchain Leadership Fund endorsed him in May. That group was launched this spring with support from Anchorage Digital and Chainlink Labs, and its full spending picture will not be known until its Q2 FEC filing lands.
In New York, Rep. Ritchie Torres is expected to win his primary, while Protect Progress is spending $1.4 million backing him. Fellowship PAC, which is described as Tether-linked, spent about $300, 000 supporting Torres. In New York’s House District 12 race, more than $24 million in outside funding has gone into support or opposition around Alex Bores, much of it from AI-focused groups with overlapping backers from the broader crypto PAC world. Ripple co-founder Chris Larsen and Palantir’s Joe Lonsdale are among the names tied to that spending network. Lonsdale also backs the crypto-friendly bank Erebor.
That overlap matters. This is not always about crypto in a narrow sense. It is about a wider techno-political donor class that likes disruption, hates old gatekeepers, and will happily back whichever candidate looks most likely to help their preferred future arrive faster.
Alabama shows the same pattern with a more Republican flavor. Defend American Jobs spent $12 million total to back Rep. Barry Moore, including $7.4 million in the primary and $4.7 million in the runoff against Jared Hudson. Fellowship PAC also spent $350, 000 supporting Moore, and Cameron and Tyler Winklevoss each made $7, 000 contributions.
Moore pushed back on critics accusing him of being “bought” by “out-of-state crypto billionaires, ” and said he shares Fairshake’s opposition to CBDCs. That message lands well in a party where anti-CBDC politics have become almost standard issue. It is easier to campaign against a surveillance-styled digital dollar than to explain every corner of crypto tax law to voters who just want Congress to stop setting things on fire.
Fairshake’s spending has not been a universal win button either. It spent $10 million in Illinois and still failed to defeat Lt. Gov. Juliana Stratton in the Democratic primary for the state’s open Senate seat. Money can buy air time. It cannot buy omnipotence.
That is why the “crypto voter” idea deserves some skepticism. The source argues that only 4% of U.S. voters care about a candidate’s crypto stance. That figure is too thinly supported to treat as gospel, especially when the polling picture points to something more complicated.
About 1 in 5 Americans Have Used Crypto; Republicans’ Use is higher among men than women, younger adults than older adults, and upper-income Americans than lower-income Americans. More importantly for politics, Pew found that Republicans and Republican-leaners are now more likely than Democrats and Democratic-leaners to have used crypto: 22% versus 17%.
That partisan gap is not huge, but it is real. Pew says Republican usage is up six points from five years ago, while Democratic usage is unchanged from 2021. So yes, there is a clear rightward tilt in crypto use and enthusiasm. No, that does not mean crypto has become a one-party identity cult. It means the GOP is now more closely aligned with the industry’s anti-CBDC posture, deregulation instincts, and donor network.
The bigger point is simpler: crypto is no longer outside politics. It is inside the system now, with all the ugly compromises that come with that. Bills stall, lobbyists fight, PACs spend, and polling shows the public is interested but cautious rather than credulous.
- Is the CLARITY Act close to becoming law?
Not cleanly. The bill still has unresolved fights over ethics, illicit finance, prediction markets, and stablecoin rewards, and the Senate calendar is tight. - What does HR 9175 change?
It would change the tax timing for certain mining and staking rewards so they are not taxed immediately upon receipt, but when sold. - Why are bankers pushing back?
The ABA says the bill would give crypto unfair treatment compared with other assets and could pull capital away from the banking system. - Do crypto PACs guarantee election wins?
No. They can shape races, but Illinois showed that even huge spending does not guarantee victory. - Is there a real crypto voter bloc?
There is a crypto-aware slice of voters and a strong donor network, but not clear evidence of a massive single-issue bloc that decides national races. - Which party is more crypto-aligned now?
Republicans. Pew found 22% of Republicans and Republican-leaners have used crypto, compared with 17% of Democrats and Democratic-leaners.
Crypto policy is no longer a sideshow in Washington. It is now tangled up with committee turf wars, tax fights, bank lobbying, anti-CBDC politics, and election money. That makes progress possible, and messy. Mostly messy.
Further reading
A quick extra reference on the market-structure wrangling around CLARITY and the Senate side of the fence:
