House Democrats expressed concern over the SEC’s lack of cooperation on CLARITY ACT amid the rapid Republican push for the bill, warning on the the bill’s sweeping impact on the agency’s regulatory role and possibility of potential loopholes allowing traditional securities firms to evade existing regulations by adopting blockchain-based structures

Event date

June 3, 2025

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“These [exemptions] could be creating loopholes based on technology,” another Democratic staffer said. “Traditionally, the agency tries to be tech-neutral, so their rules won't become obsolete once the tech evolves.”

Democrats are particularly concerned about the perceived lack of cooperation from the SEC, given the massive impact the CLARITY Act would have in reshaping the agency’s role in regulating financial markets, and the speed with which Republicans are aiming to push the bill through the House.

The Democratic staffers say that members have concerns about the traditional securities firms finding loopholes in this major legislation that will allow them to skirt existing securities regulations.

Democrats are growing increasingly concerned that, by carving out crypto from the SEC’s oversight, the CLARITY Act could create loopholes big enough for traditional finance players to slip through, too, so long as they adopt blockchain. That’s one major reason Democrats want to get the SEC’s input on the CLARITY Act before the bill sees a committee vote as soon as next week.

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Week 23 of 2025