As the Digital Asset Market Clarity (CLARITY) bill has been postponed indefinitely in the U.S. Senate Banking Committee, decentralized finance executives are using the delay to lobby lawmakers over their concerns with the bill.
Before Republican leaders on the Banking Committee decided Wednesday evening to postpone the markup, crypto industry groups had raised concerns about the provisions related to tokenized stocks, stablecoin rewards and their potential impact on DeFi platforms. The DeFi Education Fund said On Wednesday, some proposed amendments could “seriously harm DeFi technology and/or worsen market structure legislation for software developers.”
Crypto venture capital firms have said the legislation will require revisions to address concerns about DeFi and developer protections.
Alexander Grieve, vice president of government affairs at crypto investment firm Paradigm, said the highest priority was to protect developers and DeFi, adding that there needed to be “significant changes” to the bill. Jake Chervinsky, General Counsel of Variant, said On Thursday, his “main concern” was DeFi, noting that the bill was substandard.
“The latest draft leaves ambiguity as to whether all kinds of developers and infrastructure providers could be forced to use user KYC, register with the SEC, or comply with other rules that do not fit with DeFi,” Chervinsky said on X.
Related: Goldman Sachs CEO says CLARITY Act ‘still has a long way to go’
The bill was expected to be increased after months of delays related to lawmakers’ debates over decentralized finance, potential conflicts of interest and stablecoin provisions. However, Tim Scott, chairman of the US Senate Banking Committee, announcement a “brief pause” after Coinbase CEO Brian Armstrong said on X that the exchange could not support the invoice as written.
What is the DeFi fight about in the bill?
Unlike banks pushing for CLARITY to ban interest-bearing stablecoins, many industry advocates, including Armstrong, said the current version of the bill restrict the activities of DeFi platformspotentially moving businesses out of the United States.
“I’m confident we can solve some of the problems in DeFi,” Cody Carbone, CEO of cryptocurrency advocacy organization The Digital Chamber, told Cointelegraph. “I think right now some of the [focus is] on the narrowing of certain definitions. But I am confident that over the next couple of weeks or at least until the next markup, we can get to a good place with DeFi.
“[DeFi and crypto developers] don’t really care about fighting yields,” said Todd Phillips, assistant professor of law at Georgia State University’s Robinson College of Business, in an article in Friday
Some Democratic senators would have raised Concerns over the bill allowing DeFi platforms to facilitate illicit transactions, pushing for restrictions in amendments, including those flagged by the DeFi Education Fund.
As of Friday, no new marking date had been scheduled.
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