With the days of July waning, members of the United States House of Representatives’ Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence gathered in New York City to hear testimony from multiple professionals in the financial industry. The hearing at Federal Hall essentially produced a commercial for the legislation as doubts mount about whether the US Senate will vote on the bills that the House has approved before the calendar turns to August and time potentially runs out on consideration of this version of the CLARITY Act.
Committee members shaped their questions to welcome hearing participants to testify on the necessity and virtues of the CLARITY Act that the House approved while downplaying concerns that members of the US Senate have voiced. The discussions did not reveal any new talking points, though, doing little to belay fears that the legislation will dawdle for the rest of the current Congressional term.
Hearing welcomes testimony from communications and finance professionals
Friday’s hearing at Federal Hall featured House subcommittee members and officials from four companies in the communications and finance industries.
- Sarah Aberg, Chief Legal Officer, Nova Labs Inc.
- Randi Abernethy, Head of Clearing and Group Risk, Bullish
- Ryan Louvar, Chief Legal Officer, WisdomTree
- Jason Somensatto, Director of Policy, Coin Center
During the questioning, subcommittee members asked hearing participants about how the current regulatory framework has presented obstacles for their companies and how centralized regulation would alleviate those issues. The consensus of the participants was clear in support of the CLARITY Act’s potential to create that centralized regulation.
CLARITY Act gets ringing endorsement from members, speakers
In her opening statement, Abernethy made the elevator pitch for the necessity of the CLARITY Act.
“Last September, New York’s Department of Financial Services licensed us to serve US customers, and we are now working with the CFTC (Commodity Futures Trading Commission) and NFA (National Futures Association) on the registrations needed to operate a federally regulated exchange, clearinghouse, and intermediary,” Abernethy stated. “We are not asking to operate in the shadows. We are asking for a rule book, and we intend to build under it. That is why the Clarity Act matters. One year ago today, the House passed it, 294 to 134, with strong bipartisan support.
“By drawing a clear line between the SEC (Securities and Exchange Commission) and the CFTC, it gives responsible firms what they asked for over a decade of uncertainty while capital and innovation moved offshore, and I want to be direct: regulatory clarity is not a favor to industry. It is how Congress brings this activity onshore under American regulators with American investor protections.”
Clear rules are needed
Louvar echoed those sentiments.
“I’ve spent more than 25 years working at the intersection of asset management, ETFs, digital assets, and tokenization, focused on legal compliance, risk management, and policy,” Louvar said. “The Clarity Act matters because it can provide the market structure certainty around asset classification and SEC and CFTC jurisdiction, with broader modernization provisions needed for responsible tokenization and blockchain-based infrastructure to scale in the United States.”
Aberg emphasized that the status quo provides firms little assurance that regulatory frameworks won’t shift dramatically in short periods of time.
“Absent clear rules, which we intend and want to comply with, compliance becomes impossible,” Aberg commented. “It is at best guesswork. The regulatory environment that changes with an election cycle is not sustainable. It’s not durable, and it does not support long-term infrastructure projects like ours. So the only way to do that is through legislation, and that precludes the next SEC chair from simply, you know, changing his mind and reversing the guidance that we’re under now.”
Addressing manipulation risks
Somensatto fielded a question from Rep. Thom Tillis about illicit finance and market manipulation risks.
“We’re talking about a novel technology that has the potential to be very innovative and come, you know, be used in a bunch of different ways, as you’ve heard from some of the witnesses today,” Somensatto answered. “And what that requires is an understanding of where that line is, right? So many have been acting in an environment in which, you know, there’s kind of unclear, unwritten rules out there. There’s evolving interpretations between various regulators, and that’s just not an environment in which, if you’re a software developer, somebody who wants to see some of the future innovations be built, that you can really operate easily in. And so, the fact that Clarity kind of draws those very clear lines, gives guidance both to the regulators and to the individuals participating in these networks is really powerful.”
To the extent that the conversation framed the CLARITY Act as an essential piece of legislation that will guide the future of cryptocurrency and decentralized finance in the US, that legislation is running out of time to move through the US Senate before its chances potentially become more tenuous.
CLARITY Act enactment chances fading with July 2026
July 2026 is commonly viewed as the final chance for this version of the CLARITY Act to clear the Senate. August will push the legislation too close to the upcoming midterm elections, and the future composition of both houses of Congress is unpredictable.
Should the Democratic Party take control of the Senate, the CLARITY Act could see substantial revisions or languish in committee. The proposal did clear the Senate Banking Committee in May, but Democratic members of that body said they would not support the legislation for final passage without amendments to strengthen safeguards against illicit finance, market manipulation, and promote accountability for violators.
The CLARITY Act needs clear support from every Republican member of the current Senate plus at least seven Democrats to proceed from Congress, which currently poses a daunting task in a little over a week’s time. Friday’s field hearing was an attempt to motivate Senate supporters to put effort and time into trying to beat those odds.
