Senate Republicans Defend CLARITY Act Before May 14 Markup

Senate Banking Committee Republicans mounted a public defense of the CLARITY Act on May 12 ahead of a scheduled markup on May 14, arguing the bill would not weaken securities law and would clarify regulator roles while adding disclosure and anti-fraud measures for digital assets.

The response followed publication of the bill text on May 11 and a committee press release on May 12. Republicans rejected claims that the proposal creates loopholes or favors industry. They presented the measure as keeping digital asset securities under the Securities and Exchange Commission’s jurisdiction while placing new disclosure duties, resale limits and anti-evasion compliance requirements on covered entities.

The release highlighted the intended division of authority between the SEC and the Commodity Futures Trading Commission. The statement said, “Americans deserve transparency, fairness, and accountability regardless of the technology involved.”

On illicit finance, the bill would extend Bank Secrecy Act requirements to digital asset brokers, dealers and exchanges. The proposal includes mandatory anti-money-laundering programs, suspicious activity monitoring, customer identification procedures and sanctions compliance. It would also grant Treasury expanded authority to address high-risk foreign digital asset activity tied to money laundering concerns.

The proposal adds consumer-facing rules such as required educational materials about digital asset risks, standardized disclosure forms and procedures for reporting fraud. Regulators would be asked to coordinate on financial literacy efforts, and anti-fraud authority and resale limits would remain enforceable for market activity involving digital assets.

The text addresses retail and decentralized finance issues. Operators of digital asset kiosks would have to register and meet compliance standards that include consumer warnings, fraud controls, holding periods and withdrawal limits. Centralized intermediaries that interact with DeFi protocols would face risk-management obligations. The bill would also provide liability protections for software developers who do not control customer funds, distinguishing code authors from entities that handle user assets.

Committee Republicans said the bill was shaped by more than 10 months of negotiations with regulators, law enforcement officials, academics and industry participants and framed the package as an alternative to fragmented oversight. Critics have raised concerns about investor protections, regulatory gaps and illicit finance risks connected to DeFi and developer liability.

Bipartisan negotiations and the May 14 markup will determine whether the CLARITY Act advances out of committee.