Here’s what crypto needs to pass the Clarity Act, according to these lawmakers

US lawmakers have made “a lot of progress” on major crypto legislation and a fresh draft should be ready by the end of the week, Senator Tim Scott said at an industry conference Tuesday.

“It feels like the big momentum is finally on our side,” Scott, the chair of the Senate’s Banking Committee, said onstage at the DC Blockchain Summit.

“I believe that this week we will have the first proposal in my hands to take a look at.”

The Clarity Act would create a long-sought regulatory framework for cryptocurrencies in the US. It passed the House of Representatives with bipartisan support in July. But it stalled in the Senate after banks pressed lawmakers to include language preventing crypto exchanges and other companies from paying interest on customers’ stablecoin holdings.

That infuriated crypto companies, some of which are among the largest donors in US politics. Scott pulled a scheduled vote on the bill at the 11th hour, and the ensuing deadlock has threatened to sink the bill entirely.

Scott’s optimism came just hours after House colleague Dusty Johnson, a Republican from South Dakota, marvelled at the Senate’s plodding pace during his own appearance at the same conference.

“I don’t get it,” he said ruefully. “We really are running out of time.”

Election woes

The statement comes ahead of the key midterm votes in November.

Those congressional elections could see Democrats retake both chambers of Congress, a development that would likely spell the end of major crypto legislation. A split House would grind any legislative work to a halt until the 2028 elections.

“I don’t know what Congress will look like next year, but I do know we’re gonna lose a number of key players,” Johnson said.

He said a handful of Democrats need to buck party leadership in order to cut a deal.

“We are still looking for three or four key Democrats on the committees of jurisdiction to really just tell their leadership we will absolutely get this done,” he said. “And of course, the Republicans then need to be willing to give a little too, but I think it does start with having the same kind of critical mass of deal-cutting Dems in the Senate that we were blessed to have in the House.”

Senators have been working on ethics language in the bill, according to Scott. Democrats have insisted that any bill include language barring elected officials — including the president — from owning or launching crypto companies while in office, provisions that Republicans have been loathe to include.

Senators have been hammering away at two other issues, Scott added: how to prevent cybercriminals from laundering money through DeFi protocols, and the lack of Democratic representation on the US’ historically bipartisan financial regulators.

“The good news is those issues seem to pale in comparison to the [stablecoin] rewards issue,” Scott said. “But they’re still very important, outstanding issues that we are nibbling away at.”

But the industry needs to be willing to cut a deal too, according to Johnson.

“Don’t move the goal posts,” he said. “I know that there are a few more things that y’all want, but the second people get the sense that the store is open, it just sets the whole process back six months.”

Aleks Gilbert is DL News’ New York-based DeFi reporter. Have a tip? Reach out at aleks@dlnews.com.