The Cryptocurrency Clarity Act returns to the Senate this week. Banks is already trying to kill him.

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Speaking of liminal spaces and endless corridors that drive their inhabitants crazy: Today, we’re going to Capitol Hill, where the Senate is, finally, reconsidering the cryptocurrency market structure bill known as the Clarity Act. It actually drives everyone crazy.

On Sunday, as the cryptocurrency industry was on the cusp of victory to bring the Clarity Act back to the Senate, the American Bankers Association, one of the largest interest groups in the country’s financial industry, sent out an email that instantly ruined Mother’s Day. I apologize to all the mothers I wrote to Rob NicholsPresident and CEO of ABA, Plead to CEOs over emailfrom Wall Street to community banks, to drop everything and start calling their senators ASAP — “please encourage your employees to do the same” — because the Clarity Act poses an existential threat to their industry. “The current version of the legislation, while improved over the previous version, still does not adequately prevent crypto companies from offering interest-like rewards on stablecoins for payment,” Nicholls wrote, warning that if the “loophole” is not closed, customers will be incentivized to move their cash holdings into stablecoins, triggering a flight of bank deposits that would severely undermine banks.

Rarely does one see so much panic on Wall Street over pending legislation, but the Clarity Act, which is scheduled to return to the Senate Banking Committee on Thursday, poses a major threat to traditional finance — or at least, the tradition of “keeping money in bank accounts that pay interest to customers.” This is no ordinary bill that provides finer details to address a pre-existing problem in a regulated industry. This is the market building The bill – that is, the comprehensive law that will guide the market on how stablecoins, or digital tokens pegged to the value of one US dollar, can be legally regulated. In fact, it is so consequential for the future of cryptocurrencies that in January, before the Senate Banking Committee began discussing a draft of the bill, Coinbase, the largest US company in the industry, He suddenly announced that he would not support the release as it exists, claiming that banks rewrote it in a way that would hurt cryptocurrencies in the long run, setting off months of angry negotiations over the bill’s language. (As one industry observer pointed out to me at the time, one couldn’t pass a US cryptocurrency market structure bill without support from the country’s largest cryptocurrency company.)

The upside for the cryptocurrency industry is that they all seem to be on the same page now. After months of negotiations that took place in the White House, which he organized Former special advisor on artificial intelligence and cryptocurrencies David Sacks And his followers in management, Coinbase reached a compromise with other digital asset companies and major financial institutions represented at the meetings. “The word ‘settle’ is linguistically very precise,” he said. Vassilis Tsiokasvice president of growth at blockchain technology company Matter Labs, who was not in the negotiations but did He analyzed all 300-plus pages of the current bill. According to current language, the bill does not allow stablecoins to offer cash interest returns — but it does It is forbidden For them to provide yields, both. It’s a sufficient legal window for cryptocurrency companies to offer activity-based rewards on transactions, similar to how credit card points are redeemed for things like flights. “The current wording of the Clarity Act is ideal for the legal industry, because once clarity becomes law, it is up to lawyers to interpret what ‘activity-based rewards’ means,” Tziukas noted.

The creative wording seemed to make everyone in the room not do that andHappy – especially since the administration has made it clear that passing the cryptocurrency market structure bill is a top priority for them, demanding that the bill reach Trump’s desk by the Fourth of July. “For people who live in it full time, this is the 150th compromise,” he joked. Peter SmithCEO of the company Blockchain.comwhose team was in contact with all key players involved in the drafting and negotiation process.

But now that there are words on paper, and those words are before the Senate Banking Committee, which regulates securities, it appears that all the major crypto players and their TradFi counterparts are traveling to D.C. for last-minute backdoor networking, lobbying, and leaking damaging opposition research to Capitol Hill reporters, before the committee meets to mark up on Thursday. The committee markup process is one of the best and last opportunities to effect tangible change in legislation before it comes to a full vote, and it is still possible to influence committee members. the practical However, influencing these senators has become somewhat difficult.

Public opposition to Clarity comes from community banks — not the monolithic banks on Wall Street, but smaller operations serving regions, states and towns. While a bank the size of JPMorgan Chase could handle clients moving their funds into stablecoins, these smaller banks would be threatened. But these smaller banks are also considered to be powerful domestic politically, where they can exert greater pressure on their elected officials than any large entity nationwide. Senator Katie Britt (R-AL) saw the most pressure on this front. To a somewhat more complex extent, this also happened Senator Thom Tillis (R-NC), whose state is home to several major banks, including the headquarters of Bank of America.

The second tier of opposition: the big banks, which are also members of the same trade associations as community banks. Their concern is the potential loss to high-net-worth individuals rather than the general consumer: If their wealthy clients decide that stablecoin wallets and companies will provide them with a greater return on investment, either through interest returns or a rewards program, they may eventually decide to move their money out of the banks. (But no big Wall Street bank can win public sympathy with this argument, so don’t expect JPMorgan Chase to make much of a fuss.)

Then there Donald Trump Of everything. Democrats who oppose the Clarity Act point to the lack of an ethics provision that would restrict public employees, including lawmakers, from benefiting from cryptocurrency interests while in office. This category will include Trump, whose family has investments in several cryptocurrency companies. “This bill puts investors, our national security, and our entire financial system at risk — and will further Donald Trump’s crypto corruption,” he said. Senator Elizabeth Warren (D-MA), a vocal critic of the cryptocurrency industry and a ranking member of the Senate Banking Committee. “In just one year in office, the President and his family have generated at least $1.4 billion in gains from cryptocurrency trades alone, and yet this bill astonishingly contains no provisions to prevent that.”

and then There are the actual back-channel negotiations, where things get ridiculous. “The interesting last-minute development is that it seems like it’s kind of… Housing bill “It’s written into the law of clarity itself,” he said. Sam Lymanhead of research at the Bitcoin Policy Institute, which has been closely tracking the draft protection law for open source software developers.

According to Lehman, the deal A federal program that funds local housing development is called the Build Now Act This, which was placed at the end of the draft, appears to have been a concession to both Senators Warren and… Senator John Kennedy (R-LA). “The number one thing is it reinforces the bipartisan intent of the bill, if you’re getting legislative language that is supported by a prominent Republican and a prominent Democrat,” Lehman noted. “It also makes Senator Kennedy more supportive of the bill because he was one of the few Republicans who was somewhat dragging his feet when it came to the Clarity Act. But including that language in the bill seems like a sort of concession to him in support of clarity while also allowing Warren one of her concessions as well.”

Meanwhile, public kayfabe continues to play out, in particularly dramatic ways. Key figures in crypto policy We are Reinforcement with ABA on X. Coinbase CEO Timeline Brian Armstrong It is leakedBut only the parts that make it seem like he’s pandering to Republicans rather than Democrats. The cryptocurrency community has spent the past day delving deeper A paper he wrote Bill NelsonHead of the Research Department at the World Bank Policy Institute Accused of distorting important statistics from a Cornell University professor’s research paper on digital assets, W Alleging that Nelson used artificial intelligence to write it. (Professor Cornell, lin william kung, He issued a sweeping takedown of Nelson’s blog post.)

One of the silly moments of the season, as Lyman pointed out, was the weirdness of Warren, a huge anti-Banks fighter, somehow siding with them in this fight.

“I feel like it’s the biggest irony that no one sees,” he joked.

I would like to share a lovely tribute to ted turner, And please read this on Ric Flair The sound, because that’s how Turner wanted it: