The US Congress provided two bullish catalysts for the crypto sector this week as the Clarity Act advanced to the Senate floor and senators confirmed Kevin Warsh’s nomination as Federal Reserve chair on Thursday. These developments prompted Bitcoin (BTC) to climb from $78,000 to $82,000 within 24 hours, effectively negating analysts’ “sell the news” predictions. Currently, the leading crypto asset is trading around $81,000, with major altcoins following suit, signaling sustained investor confidence and a potential bullish shift in market sentiment.
The Senate Banking Committee’s version of the bipartisan Clarity Act progressed as scheduled in the upper chamber, positioning it for harmonization with the provisions of the Agriculture Committee’s version. Delays in the Banking Committee’s bill stemmed from a deadlock between banking and crypto lobbyists over several provisions, primarily focusing on stablecoin yields from idle holdings. The banking sector and trade groups had argued that allowing such a mechanism could divert up to $6 trillion from bank deposits into stablecoins. After months of deliberation, including White House intervention, parties eventually agreed to a ban on yields “economically or functionally equivalent” to interest payments on bank deposits. However, the bill will permit “activity-based rewards” like rebates, cashback, and loyalty points. Despite a last-minute attempt by banking sector supporters to push for a complete ban on all stablecoin and crypto yields, the Banking Committee upheld its prior agreement with crypto representatives. The bill will now undergo further scrutiny in the Senate, where lawmakers will debate other provisions, including ethical standards for elected officials, consumer protection, illicit finance, and safe harbor for software developers.
Kevin Warsh secured his confirmation with a 54-45 vote, an outcome largely split along party lines, with Republicans favoring his bid and Democrats opposing it due to his perceived close links with US President Donald Trump. Senator John Fetterman (D-PA) was the sole Democrat to support Warsh. Warsh is set to succeed Jerome Powell as Fed chair this month, while Powell will retain his position on the central bank’s Board of Governors. The new chair’s first Fed meeting is scheduled for mid-June. Warsh’s appointment was largely welcomed by the crypto community, citing his prior investments in crypto- and artificial intelligence (AI)-related projects and his strong opposition to retail-focused Central Bank Digital Currencies (CBDCs). During his confirmation hearing, Warsh assured the public and lawmakers that he would maintain the Fed’s independence, addressing allegations of strong influence from President Trump. He stated that the president never asked him to commit to a particular interest rate, and he would not have agreed to such a request had it been made.
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