Crypto Clarity Act barrels toward disappointment barring last-minute Senate turnaround

The U.S. Senate hasn't yet locked down enough support for the Digital Asset Market Clarity Act to move toward passage as the clock ticks toward a planned Tuesday afternoon opening vote, with both Republicans and Democrats expressing frustrations with the other side's position.

Republican lawmakers had put out a version of the crypto market structure legislation over the weekend, and they declared it their final offer. But the compromise efforts they added to the key sections of the bill were met Monday with a counter offer from Democrats that's similarly fallen flat.

"Senate Democrats’ counter offer looks identical to their opening position at the start of recess," said Senator Cynthia Lummis, one of the leading Republican negotiators, in a statement that lamented that "Democrats have not budged an inch" even as Republicans "moved substantially on every front."

"If Democrats are serious about reaching a deal, they need to actually start negotiating instead of resubmitting the same demands and calling it progress," Lummis concluded.

Though she's been on the sidelines of the negotiations, Senator Elizabeth Warren, the Senate Banking Committee's top Democrat, told reporters on Tuesday that the legislation pushed over the weekend by Republicans "was not negotiated with the Democrats."

"It was between the Republicans and White House, and the changes were nonsense," said Warren, who has been a steady critic of the legislation and of the industry behind it. "In each case, they put in some new words that pretended to solve the problem, and then just either left the problem intact or expanded it later on."

Washington policy analysts were affixing long odds on the voting process Tuesday.

"With Democrats largely skeptical of the GOP’s latest offer, it’s unlikely they will provide the necessary votes to advance the bill later today, barring significant changes," Beacon Policy Advisors wrote in a client note. "While the party could hypothetically vote to advance the bill to continue negotiations — reserving the ability to vote it down if things move further in their direction this month — we think that pathway is narrow."

Some hours remain before the 2:15 p.m. planned vote, and such legislative negotiations have been known to strike deals in the final seconds. But some industry insiders are unsure whether the talks can be salvaged, and leaders like Coinbase CEO Brian Armstrong have spent recent days arguing that a failed bill won't halt regulatory progress.

At an industry event in Washington on Monday, White House crypto adviser Patrick Witt said that the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission both have "robust" regulatory agendas set for crypto rules.

"They've got a job to do one way or the other," he said. "There's still good news coming for the industry."

However, even SEC Chair Paul Atkins has routinely acknowledged that his agency’s rules need the backing of law to be permanent. And the powers of the CFTC have a gaping hole when it comes to direct regulation of the crypto commodity spot markets — such as the trading of bitcoin BTC$76,485.22 and Ethereum's ether ETH$2,428.15.