US Senate Rushes to Pass Major Crypto Bill Before Midterm Elections

The US Senate is racing against time to pass a major crypto bill, known as the Clarity Act, before the midterm elections. The bill aims to formally legalize most crypto activity in the US, including the initial sale of crypto tokens to U.S. residents in what were previously called ICOs.

However, the path to passage is far from smooth. Disputes over stablecoin yield, rewards paid to holders of crypto tokens pegged to the value of the dollar, are a major hurdle. The banking industry has expressed concerns that these rewards would make it difficult for smaller banks to compete for consumer deposits.

Senate Banking Committee chair Tim Scott expects a potential compromise on stablecoin yield language in the Clarity Act this week. But even if this issue is solved, other challenges remain. These include decentralized finance (DeFi), financial applications that exist natively on blockchain networks and circumvent the need for third-party intermediaries like banks.

Additionally, there are concerns about the Trump family's crypto businesses, including a stablecoin venture with World Liberty Finance. Several key Senate Democrats have insisted these businesses must be outlawed by the crypto bill.