CLARITY Act Faces Growing Scrutiny as Senate Markup Begins

Lawmakers Warn CLARITY Act Could Widen Crypto Finance Gaps

Senate Democrats intensified disapproval of the CLARITY Act connected May 14, 2026, informing that the crypto marketplace operation measure could permission large illicit concern vulnerabilities unresolved arsenic the Senate Banking Committee began debating the legislation. The unit run coincided with a abstracted petition from Senators Elizabeth Warren and Jack Reed for a national probe into World Liberty Financial (WLF).

The markup adds urgency to the combat implicit the Digital Asset Market CLARITY Act. The Senate Banking Committee is presently debating the bill. Lawmakers are weighing a revised 309-page draft backed by Chairman Tim Scott and Senators Cynthia Lummis and Thom Tillis, with much than 130 amendments filed. Warren submitted 44 amendments, including 1 aimed astatine governmental corruption successful banking applications. The draught besides includes a stablecoin compromise and added lodging language, underscoring the effort to assemble enactment earlier Memorial Day recess and support a imaginable summertime level ballot alive.

The advisory released by the Senate Banking Committee number unit stated:

“As Congress considers crypto marketplace operation legislation, it indispensable support Americans by closing known illicit concern vulnerabilities successful our ain strategy and laic the instauration for pressing different countries to bash the same. It indispensable debar creating caller carveouts that tin beryllium exploited by sanctions evaders, terrorists, cartels, kid abusers, and different criminals.”

Minority unit identified respective alleged gaps successful the bill, including DeFi exemptions, a Tornado Cash loophole, and a stablecoin sanctions gap. The investigation besides argued that the authorities fails to follow a planetary modular for identifying crypto platforms that indispensable forestall wealth laundering and different illicit activity. Committee Democrats cited open-source quality reports, instrumentality enforcement warnings, manufacture analyses, and authorities findings passim the advisory.

WLF Probe Request Adds Pressure for Clarity Act Markup

Separately, Warren and Reed’s petition gave the broader critique a circumstantial enforcement example. Their missive to Treasury Secretary Scott Bessent and Acting Attorney General Todd Blanche followed Wall Street Journal reporting that WLF, the Trump family-backed crypto company, partnered with a crypto task whose flagship task had antecedently been led by U.S.-sanctioned individuals.

The lawmakers noted that those individuals were sanctioned successful October 2025 implicit ties to Prince Group, described arsenic a monolithic transnational transgression enterprise. The senators questioned whether WLF vets partners, counterparties, and users, portion citing reports that WLF sold tokens successful 2025 to buyers linked to North Korean hackers, sanctioned Russian money-laundering entities, and different illicit actors. They wrote:

“As Congress considers crypto marketplace operation legislation, it indispensable see provisions that support our nationalist security, defender against illicit finance, and enactment instrumentality enforcement efforts to clasp transgression actors accountable.”

Warren and Reed requested written responses by May 26, 2026, connected imaginable enforcement actions against firms with inadequate controls. Together, the number advisory and WLF enquiry are placing greater absorption connected nationalist security, sanctions enforcement, and illicit concern oversight arsenic lawmakers statement the CLARITY Act.