Lead

The Senate Banking Committee approved the CLARITY Act on a 15‑9 vote after a heated markup that saw Democratic opposition led by Senator Elizabeth Warren clash with pro‑crypto Republicans. At the same time, three privacy‑focused blockchain networks—Arc, Canton and Tempo—have collectively raised more than $1 billion, each valued north of $10 billion, underscoring growing institutional confidence in private crypto infrastructure.

Background

The CLARITY Act, a bipartisan bill aimed at modernizing anti‑money‑laundering rules and clarifying stablecoin regulation, has been a focal point of congressional debate. Critics argue the bill favors the crypto industry while ignoring broader economic concerns, whereas supporters claim it protects national security and preserves American innovation. Meanwhile, privacy‑focused chains have emerged as a response to institutional demands for selective disclosure, a feature lacking on public blockchains like ethereum. Major financial firms—BlackRock, Goldman Sachs, Visa, Deutsche Bank and Stripe—have invested in these networks, signaling a shift toward private or permissioned solutions for stablecoin settlement and asset tokenization.

What Happened

The Senate hearing on May 14 began with Chairman Tim Scott framing the CLARITY Act as a necessary modernization of “outdated rules” to prevent criminal exploitation and protect national security. Scott invoked his personal background to emphasize that innovation should be accessible to all families. Within the first hour, Ranking Member Elizabeth Warren countered, criticizing the bill’s focus on the crypto industry while American families faced rising living costs. Warren cited a CoinDesk survey indicating only 1% of voters prioritized cryptocurrency and accused the bill of enabling a “crypto grift” involving President Donald Trump, who reportedly earned $1.4 billion from crypto deals since taking office. She argued that no public official should profit from crypto while regulating it.

During the markup, Scott exercised procedural authority to dismiss several Democratic amendments, citing procedural requirements. Senator Jack Reed challenged the majority’s interpretation of procedural rules, arguing that amendments should be considered. The session was marked by personal barbs and a “tick‑tock” of procedural maneuvering, but ultimately the bill passed the committee with a 15‑9 vote.

Separately, Arc, Canton and Tempo announced funding rounds that collectively surpassed $1 billion. Circle’s Arc closed a $222 million token presale at a $3 billion fully diluted valuation, led by BlackRock and Apollo. Canton Network raised $300 million at a $2 billion valuation, with a16z, Goldman Sachs and Citadel participating. Stripe’s Tempo pulled in $500 million at a $5 billion valuation, with Visa and Deutsche Bank also investing. These rounds demonstrate that traditional financial institutions are backing privacy‑enabled blockchain infrastructure.

Market & Industry Implications

  • Regulatory clarity from the CLARITY Act is expected to unlock institutional capital in the crypto space, as institutions prepare to deploy infrastructure that will comply with forthcoming rules.
  • The passage of the bill may accelerate the adoption of stablecoins and private chains by providing a clearer legal framework for anti‑money‑laundering compliance.
  • Privacy‑focused chains are positioned to meet institutional demands for selective disclosure, allowing corporate treasuries and trading desks to transact without exposing sensitive data to competitors.
  • Visa’s stablecoin settlement pilot, which now operates at a $7 billion annualized run rate across nine blockchains—including Arc and Canton—signals that major payment networks view privacy features as essential for scaling stablecoin settlement beyond pilots.
  • The involvement of heavyweight investors such as BlackRock, Goldman Sachs, Visa and Stripe lends credibility to the valuation of these networks, though retail participants should note the dilution risk associated with token presales at multi‑billion‑dollar valuations.

What to Watch

  • Final vote on the CLARITY Act in the full Senate and potential amendments that could alter its scope.
  • Progress of the GENIUS Act and the STABLE Act, which are also moving through Congress and could further define stablecoin regulation.
  • Future funding rounds or operational milestones for Arc, Canton and Tempo, particularly any moves toward commercial deployment or integration with major payment networks.
  • Regulatory guidance from the Treasury and FinCEN on how the CLARITY Act will be implemented, especially regarding private chain compliance.