CLARITY Act Senate Delay Could Threaten Crypto Custody Safety, Says Senator Cynthia Lummis

Capitol Hill observers believe the legislation must advance next week or its chances of passing this year could effectively disappear.

• Senator Cynthia Lummis argued the CLARITY Act would protect customer crypto assets from being swept into bankruptcy during company failure.
• The bill remains stalled in the Senate, with no floor vote scheduled.
• Key disputes remain unresolved, including ethics provisions and law-enforcement concerns over legality.

Senator Cynthia Lummis (R-WY) on Monday pitched the Digital Asset Market Clarity Act (CLARITY Act) being delayed as a loss for consumer protection, stating the crypto market structure bill will safeguard users from losing their digital assets when platforms go under.

"When Celsius and Voyager went bankrupt, customer deposits didn't stay customer deposits," Lummis wrote on X. "They became assets in a bankruptcy pool, fought over by creditors who had never even heard of the customers who owned them. The Clarity Act changes the rule so your crypto stays yours, even if the company fails."

In the 2022 bankruptcies of Celsius and Voyager, client deposits were classified as general assets of the bankruptcy estate, not separate customer property, meaning depositors were left to collect funds as unsecured creditors alongside people with no relationship to their accounts. 

The push comes as the bill is still blocked in the Senate, with no floor vote scheduled, no updated legislative text issued, and only 14 working days remaining before lawmakers leave for the August recess.

Negotiations Remain Stuck As Deadline Nears

According to a report from Crypto In America, the ethics provisions related to U.S. digital assets that bar officials from profiting have not yet been finalized. Last Thursday’s closed-door consultations at the White House were attended only by Trump and Republican figures, with Democrats excluded from the meeting, leaving the negotiations in a deadlock.

The industry has also been left guessing at changes to key provisions, with no new text. A report from Politico suggested that the CLARITY Act may not get the 60 votes it needs to pass, with Democratic support for the bill weakening. 

Swing Votes And A Closing Window

Support from Senators Catherine Cortez Masto (D-NV) and Mark Warner (D-VA) depends on whether the final text addresses law enforcement and Department of Justice concerns about illicit finance, Crypto In America’s report said. “I want America to lead in digital assets, but if we get it wrong, the downside ramifications could be huge as well,” Warner said at a Senate Finance Committee hearing last week.

According to the report, the prevailing view on Capitol Hill is that negotiators have until the end of this week to tee up a cloture vote on the motion to proceed, which requires 60 votes. If the CLARITY Act is not brought to the floor next week, the window for passage before the August recess will be effectively closed.

Under the CLARITY Act, a clear market-structure framework could accelerate institutional adoption of Circle’s (CRCL) USDC, building on the foundation laid by last year’s GENIUS Act for the stablecoin.

CRCL stock was up over 3% during morning trade. On Stocktwits, the retail sentiment around CRCL remained in the ‘neutral’ zone, while chatter around it stayed at ‘low’ levels over the past day.

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