Last week, Congress failed to pass the Clarity Act after months (really, years) of negotiations, compromises and committee horseplay.
The Republican-controlled Senate has set a new date of September 15 for a “cloture” vote to advance the bill to the floor. If it receives 60 votes at that time, the bill is likely to advance, whereupon it will be reconciled with the already-passed House version, and from there will continue to the White House for the President’s signature.
This is definitely bad news. But actually not terrible news. On the bright side: Congress has shown, really for the first time, that it’s serious about dealing with the thorny issues that have hampered legislative efforts before now. And, even more, there’s been more bipartisanship on this issue than we’ve seen on many other issues.
I still believe that Clarity will pass this year, because the votes are there for this legislation in some form. And there’s enough money and industry support to override the concerns of the holdouts, who include community banks (who worry about deposit flight from stablecoins), Democrats (who want stronger ethics provisions related to the Trump’s family’s own crypto dealings) and law enforcement (who worry about carve-outs for developers from money-transmitter rules).
Of those three groups, Democrats seem like the greatest hurdle. They are not inclined to give Republicans a win before the Midterms, especially when one of their main messages is the President’s self-dealing. Will the President agree to fully divest from his crypto holdings to satisfy Democrat demands? Somehow that seems unlikely. But I still think a compromise can be found. Because even election-obsessed Democrats know that we need a crypto law. It’s simply unsustainable for the US to lead crypto while there’s so much uncertainty about doing crypto in this jurisdiction.
What does all this mean for privacy? As we discussed previously, the law doesn’t really touch much on privacy questions. But the law (or lack of it) is definitely of atmospheric importance. The industry (and asset prices) will move slower without a new law, slowing investment and weakening the general mood.
But the lack of the law doesn’t really change anything. The industry will continue to grow as it has for the last year, with more assets coming onchain and more institutions building out real onchain infrastructure. I think “native crypto” (meaning new coins) will continue to suffer. But the institutional adoption narrative will still be very much alive. Smart companies aren’t going to turn down the benefit of onchain finance, including lower costs and fees, just because some politicians can’t get their act together.
The shift to digital assets and programmable rails, like Miden’s, will continue. Because, really, there’s no turning back now.
Privacy Roundup
Hinkal Pay launched confidential payments on BNB Chain, allowing users to hold BNB and stablecoins in private balances and send funds without exposing transaction details.
Zama partnered with Hypernative to add real-time monitoring across the Zama Protocol, giving institutions and operators visibility into operational risks while keeping assets and transactions confidential.
Aztec and GalacticaNet teased Private x402, a system intended to settle agentic payments without revealing counterparties, transaction amounts or payment frequency.
Anon Wallet released version 0.8 with real-time private balances, faster proofs and improved gas and fee handling, using Railgun to let users confidentially transfer assets and interact with DeFi.
Yaya Fanusie on Privacy Podcast
Ben Schiller speaks with Yaya Fanusie, Chief Policy Officer at Aleo, about stablecoins, privacy, and the policy questions emerging as more financial activity moves onchain. Yaya first entered the industry through illicit-finance research, but as he spent more time around blockchain, he developed a deeper appreciation for what the technology could make possible.
His later research into China’s digital currency then sharpened another question: as more of our financial lives become digital and recorded, how do we preserve privacy?
The conversation explores the privacy problem created by mainstream stablecoin adoption and how zero-knowledge technology can provide confidentiality while preserving institutional controls.
Latest on Miden
We announced signing an MOU with Concrete, a full-stack vault provider powering automated, risk-managed onchain finance.
Tokenized real-world assets are among the fastest-growing categories in onchain finance, with a bull case of $8 trillion by 2030 as T-bills, funds, and private credit move onchain.
Concrete is at the center of that shift, building vault smart contract infrastructure that institutions use to issues and manage these assets, and together, we will explore bringing Miden’s privacy-preserving infrastructure to them.
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Till next time.