Senate returns with a short runway for the Clarity Act
The U.S. Senate is back in session with about four weeks left before the August recess, a stretch that policy newsletter Crypto In America described on July 13 as the last practical chance this year to move the Clarity Act, a comprehensive crypto market structure bill.
The measure still needs 60 votes to advance in the Senate. With Republican numbers under pressure, support from Democrats has become central to whether the bill can clear that threshold.
Merged bill text is expected this week
According to the report, lawmakers are expected to release updated legislative text this week that merges versions produced by the Senate Banking Committee and the Agriculture Committee. That draft is expected to show which provisions survived negotiations and which issues remain unsettled.
Two disputes are at the center of attention.
- Status of non-custodial software developers: The Blockchain Regulatory Certainty Act, included in the bill, is meant to clarify that non-custodial software developers should not be automatically treated as money transmitters when they publish code. Whether that language will be revised in response to concerns from enforcement agencies and Democrats remains unclear.
- Conflict-of-interest limits for government officials: Congress and the White House have yet to agree on ethics and conflict-of-interest language. Democrats and some Republicans, including North Carolina Senator Thom Tillis, are pushing for tighter limits on crypto business interests held by government officials, with special attention on President Donald Trump after more than $1 billion in crypto-related income last year, according to the report. That provision is now seen as one of the main factors in whether the bill can reach 60 votes.
The margin for error has also narrowed. The report said Republican vote capacity has been reduced by the death of South Carolina Senator Lindsey Graham and the absence of Mitch McConnell.
Industry views split on the bill’s chances
Policy voices in the crypto sector are not reading the situation the same way.
Kristin Smith, president of the Solana Policy Institute, is taking the more optimistic view. She said issues including conflict-of-interest provisions can still be resolved through negotiation and expects momentum to improve once the new bill text is released, leaving open the possibility of a vote before the August recess.
Alex Thorn, head of research at Galaxy Digital, has been more cautious. He lowered his odds of passage to 50% and warned that the Senate still has other major priorities ahead, including the National Defense Authorization Act, leaving the Clarity Act with limited floor time. If the bill fails in this session, he said, the U.S. would fall behind overseas jurisdictions in Web3 financial innovation.
Custodia Bank takes master account dispute to the Supreme Court
Beyond the legislative fight, a separate legal battle between U.S. regulators and a crypto-focused bank is also reaching a new stage. Custodia Bank, a Wyoming-chartered crypto bank, has filed a petition for certiorari with the U.S. Supreme Court, asking the justices to review its long-running dispute with the Federal Reserve over a master account.
The core legal question is whether a regional Federal Reserve bank has the authority to deny direct access to the Fed payment system to a fully compliant bank that holds a state charter. Custodia argues that the case goes to the balance between state authority and federal power, and to whether innovative banks can obtain fair access to the traditional financial system.
In the crypto industry, the dispute has been treated as a leading example of what critics call Operation Choke Point 2.0, the effort by some officials to squeeze crypto banking access.
Inflation data and Fed speeches are also on the calendar
This week will also bring U.S. CPI and PPI releases, along with speeches from Federal Reserve officials including Warsh and Waller on financial regulation and AI. Those events add another layer of attention for digital asset markets already focused on Washington.