Senator Cynthia Lummis called JPMorgan Chase CEO Jamie Dimon “absolutely wrong” on CNBC this week over the CLARITY Act, a proposed federal digital-asset market-structure law she co-authored. The Wyoming Republican said the bill contains 16 to 17 explicit references clarifying that the anti-money laundering and Bank Secrecy Act compliance obligations that apply to banks also apply to digital asset businesses. Dimon had argued those provisions were missing. The Digital Asset Market Clarity Act (CLARITY Act, the first comprehensive U.S. federal framework for crypto markets) cleared the Senate Banking Committee on a bipartisan 15-9 vote on May 14 and has since been added to the Senate Legislative Calendar. A floor date is still unscheduled.
The public exchange has landed while a quieter negotiation continues: what legal protection software developers who build decentralized finance (DeFi, blockchain-based financial applications running without traditional intermediaries) applications will receive under federal law. A new political action committee launched this week to lobby specifically for those developers, and Senate Judiciary Committee Chairman Chuck Grassley has already flagged objections to the provision designed to shield them from criminal prosecution.
Dimon’s Stablecoin Argument
Dimon’s primary grievance, as aired on Fox Business on May 29, centers on stablecoin yield. He argued the bill lets crypto companies offer customers rewards for holding stablecoins, products that function like interest-bearing deposits, without the capital adequacy rules, liquidity requirements, and federal deposit protections that regulated banks must carry. “It allows cryptocurrency firms to effectively pay interest on deposits, stablecoins or something like that, without the protection that they should have,” he told Fox Business. “The banks will not accept it that way.”
The American Bankers Association (ABA) has made similar arguments in formal comments, contending that certain provisions could accelerate deposit migration from regulated banks to crypto platforms. The specific flashpoint: Coinbase (the San Francisco-based crypto exchange) launched a USD Coin (USDC, a dollar-pegged stablecoin) yield product that pays customers for holding the token. The ABA and allied trade groups have urged senators to use the CLARITY Act to close what they describe as a loophole that lets crypto exchanges bypass the GENIUS Act’s existing prohibition on paying yield on payment stablecoins.
Dimon also attacked Coinbase CEO Brian Armstrong by name, saying no one in banking intends to “bow down to this guy.” The two had a heated exchange at the World Economic Forum in Davos earlier this year, with Dimon reportedly telling Armstrong he was “full of s—,” according to people familiar with the exchange who spoke with The Wall Street Journal. Dimon alleged that Armstrong is spending hundreds of millions of dollars lobbying to push the bill through Congress.
The stablecoin fight marks a second round of banking-industry pressure on digital-asset legislation. When Congress passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act in 2025, it cleared the Senate 68-30 with a specific ban on paying yield on payment stablecoins. Banking groups now argue the CLARITY Act would carve a workaround into that prohibition, letting crypto exchanges offer yield-bearing products without the safeguards banks carry.
What the Bill Says About Compliance
The Senate Banking Committee published a myth-vs-fact document on the CLARITY Act addressing Dimon’s style of objection directly. On investor protections, the committee’s position is that the bill relies on “longstanding securities law principles,” requires mandatory disclosures to the Securities and Exchange Commission (SEC, the federal regulator overseeing stocks and investment contracts), and subjects participants to anti-evasion protections and full SEC enforcement authority.
Lummis said on CNBC that the bill has “the same anti-money laundering and Bank Secrecy Act provisions that exist in the banking world.” Her count of 16 to 17 explicit compliance references directly contradicts Dimon’s suggestion that digital asset businesses would operate outside those frameworks. The compliance architecture also includes targeted rulemaking for centralized intermediaries that interact with DeFi protocols, requiring risk management standards from those entities.
| Point of Dispute | Dimon’s Position | CLARITY Act (Senate Banking Committee Text) |
|---|---|---|
| AML and BSA obligations | Absent or inadequate for crypto firms | 16 to 17 explicit compliance references, per Lummis on CNBC |
| Stablecoin yield products | Unregulated interest equivalent; will “eventually blow up” | Subject to disclosure requirements; intermediaries face rulemaking |
| Investor protections | Weaker than banking standards | SEC retains full enforcement authority; anti-evasion provisions included |
| Deposit migration risk | Real and immediate; banks “will not accept it” | Centralized intermediaries interacting with DeFi must meet risk management rules |
Yield-related products remain the substantive open question. The bill does permit some form of stablecoin rewards, with exact parameters still under negotiation. Dimon’s AML objection, as Lummis frames it on CNBC, targets compliance provisions already written into the bill’s text.
The Developers Nobody’s Negotiating For
Section 604 of the CLARITY Act incorporates the Blockchain Regulatory Certainty Act (BRCA, a provision shielding developers and infrastructure providers who do not control customer funds from being classified as money transmitters). A late-stage committee compromise to secure Democratic votes removed language that would have extended those protections to Section 301 of the bill, which addresses Bank Secrecy Act sanctions requirements. The provision’s final shape in the bill is still being worked out in closed-door Senate sessions.
A developer who publishes open-source DeFi software has no window into who runs transactions through it or for what purpose. Lummis made that argument directly on CNBC. “People who write code for Bitcoin products, for example, don’t know when they put their product out there who’s using it,” she said. “They should be protected from liability since they don’t know who the user is.”
Law enforcement groups have opposed the BRCA provision, arguing it complicates investigations into illicit financial activity routed through DeFi platforms. The Blockchain Association organized a formal letter to Senate Majority Leader John Thune and Minority Leader Chuck Schumer, signed by 160 former national security, intelligence, and law enforcement officials urging swift passage of the bill, arguing the legislation preserves prosecutors’ ability to pursue illicit digital-asset activity.
On June 3, Defend Developers PAC launched as the first political action committee dedicated exclusively to backing lawmakers who support legal protections for crypto developers. Founded by Gavin Zavatone of the DeFi Education Fund, the group’s board includes executives from the Solana Policy Institute and Uniswap Labs. It plans to back only incumbent lawmakers and target more than six figures in the 2026 midterms.
What the CLARITY Act’s Section 604 safe harbor covers:
- Publishing software for blockchain services without controlling user funds
- Providing hardware or software for a customer’s own self-custody of digital assets
- Maintaining blockchain infrastructure without unilateral authority over user transactions
The safe harbor does not extend to developers who hold customer funds, execute transactions on users’ behalf, or operate centralized exchanges. That line is what the Senate negotiations are still drawing.
A Criminal Statute Called Section 1960
At the center of the developer fight is 18 U.S.C. Section 1960, the federal criminal statute making it a felony to operate an unlicensed money-transmitting business. It was used to prosecute Tornado Cash co-founder Roman Storm, who was convicted in Manhattan federal court on a money-transmitting count for publishing open-source privacy software. The Department of Justice subsequently asked U.S. District Judge Katherine Polk Failla to schedule a retrial of Storm in October on deadlocked money-laundering and sanctions counts.
Lummis posted on X this month:
If the Clarity Act doesn’t pass this Congress, American software developers will be targeted again for prosecution in the near future just for publishing code. These are the stakes.
A separate analysis tracing the CLARITY Act’s June Senate timeline set the Storm conviction alongside the calendar pressure Lummis identified: four working weeks between the June start and August recess, with a FISA (Foreign Intelligence Surveillance Act) reauthorization deadline and a farm bill competing for the same floor days as the crypto bill.
Senate Judiciary Committee Chairman Chuck Grassley and Senator Dick Durbin sent a joint letter in January objecting to the BRCA’s inclusion in the CLARITY Act, arguing the provision modifies Title 18 of the U.S. Code, which includes Section 1960. Because Grassley chairs Judiciary, his committee has formal review authority over any language touching the criminal code. A narrowed compromise could leave developers with materially less protection than the bill’s current draft promises.
Crypto lawyer Jake Chervinsky raised a parallel concern earlier in the spring: the bill’s definition of a “non-controlling” developer may still expose certain DeFi participants to liability because the relevant provisions leave some activities in a gray area. Lummis has said bipartisan adjustments strengthened the safeguards. On CNBC this week, she signaled that DeFi negotiations remain “active” while indicating progress, without committing to revised text.
Sixty Votes and a Shrinking Calendar
The Ethics Standoff
Republicans hold 53 Senate seats. Cloture requires 60 votes, meaning the bill needs at least seven Democratic crossovers. At the Banking Committee markup in May, two Democrats voted with the majority: Ruben Gallego of Arizona and Angela Alsobrooks of Maryland. Both signaled their committee votes were conditional, with Alsobrooks saying it was “a vote to keep working in good faith” and Gallego saying his final floor vote would depend on further progress. Five more Democratic crossovers are needed.
Several Democrats have said they will not commit to cloture without an explicit conflict-of-interest provision barring the president, the vice president, and members of Congress from active digital-asset trading. Senator Kirsten Gillibrand of New York has said the bill won’t clear the chamber without that language. Senator Elizabeth Warren of Massachusetts wrote to SEC Chairman Paul Atkins on the day of the markup, noting that the Trump family had recorded at least $1.4 billion in crypto-related gains during the prior year. The Republican position is that any amendment targeting Trump-linked entities constitutes a poison pill the majority will reject, though White House adviser Patrick Witt has indicated openness to ethics rules that apply “across the board, from the president all the way down to the brand new intern on Capitol Hill.”
Before a floor vote can happen, the Banking Committee bill must also be merged with the Senate Agriculture Committee’s parallel digital-asset text, which addresses CFTC (Commodity Futures Trading Commission, the federal regulator for commodity derivatives) jurisdiction. The Agriculture Committee advanced its version in January. Lummis described the sequence on CNBC: “We now need to wrap the CLARITY Act, which dealt with the SEC portion of jurisdiction, with the Agriculture Committee’s product, fold that in with ethics.” She said the combined package then needs 60 votes for cloture.
Prediction Markets and the August Deadline
After the Banking Committee’s bipartisan 15-9 vote on May 14, the Kalshi contract for the bill passing before 2027 climbed to roughly 75%. By late May, that same contract had fallen to 49%. Key readings as of early June:
- 49%: Kalshi contract for CLARITY Act passing before 2027, down from roughly 75% in mid-May
- 61%: Polymarket contract for passage in 2026
- 70%: Galaxy Digital head of research Alex Thorn’s estimated passage odds
- 37%: Kalshi contract for passage before the August 2026 recess
The White House has said it wants the bill finished by July 4. Gillibrand has given the first week of August as a more realistic target. The Senate’s August recess is the hard backstop: any bill not cleared by then faces a post-recess calendar consumed by 2026 midterm politics. The House passed its own version of the bill 294-134 last July, so a final law also requires conference reconciliation between the two chambers after Senate passage.
The bill needs the Agriculture Committee merger, an ethics compromise, and seven more Democratic votes before Majority Leader John Thune can schedule a cloture vote. All three remain unresolved as of June 4.
