Tensions are escalating on Capitol Hill as Democratic staffers accuse the U.S. Securities and Exchange Commission (SEC) of obstructing bipartisan efforts to define the regulatory framework for digital assets. At the center of the dispute is the Digital Asset Market Structure Clarity Act (CLARITY Act)—a 236-page bill aimed at clarifying the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in overseeing crypto markets.
During a recent technical briefing, Democratic aides described the SEC’s performance as “the worst” they had ever experienced, criticizing the agency for providing vague answers and omitting its subject matter experts from the discussion. Officials from the SEC’s Crypto Task Force, legislative affairs division, and general counsel’s office were present, but aides claimed they were unable to address basic questions about the bill’s implications.
According to multiple Democratic aides, the SEC had previously shared detailed written feedback with Republican lawmakers—an industry-standard practice—while denying similar documents to Democratic members, citing privilege. The discrepancy has led to accusations of “hiding the ball,” undermining the bipartisan nature of such legislative briefings.
One staffer noted that even routine inquiries were met with evasive or poorly informed responses, suggesting either deliberate stonewalling or a lack of understanding within the agency itself. The situation, they said, reflected an “uneven flow of information,” with Democrats left without critical insights as the bill nears committee review.
The CLARITY Act and Rising Stakes in Crypto Regulation
Introduced by Republican Rep. French Hill, the CLARITY Act aims to establish jurisdictional boundaries between the SEC and CFTC, while imposing standards for transparency, customer fund segregation, and corporate disclosures among digital asset firms. Despite being Republican-led, the bill has gained bipartisan traction, with Democratic Representatives Angie Craig, Ritchie Torres, and Don Davis among its co-sponsors.
Democratic Rep. Maxine Waters, ranking member of the House Financial Services Committee, has formally requested that SEC Chair Paul Atkins provide a full technical analysis of the bill by June 6. Waters emphasized the need for clear regulatory guidance before Congress can determine whether the legislation effectively balances innovation with investor protection.
Meanwhile, the House Agriculture Committee is also scheduled to hold a hearing on the bill—highlighting its growing momentum across legislative corridors.
Democratic lawmakers remain wary that the CLARITY Act, if not thoroughly vetted, could create loopholes for traditional financial institutions to sidestep securities regulations by integrating blockchain infrastructure. Without in-depth analysis from the SEC, they argue, it’s difficult to gauge the bill’s full impact on market stability and consumer safeguards.
Waters is reportedly preparing another letter addressed to SEC leadership, reinforcing her call for detailed input to ensure responsible lawmaking.
Mounting Political Fractures Within the House
Though the bill has attracted bipartisan support, internal fractures are beginning to surface. Last month, several Democrats, including Waters, boycotted a crypto-related hearing, organizing a separate roundtable instead to spotlight what they termed “Trump’s crypto corruption and conflicts of interest.”
The episode underscores the increasingly divergent narratives shaping crypto policy: while Republicans focus on competitiveness and innovation, some Democrats are doubling down on transparency, accountability, and the risks of politicized crypto ventures.
For its part, the SEC insists it provides technical guidance to any congressional member who requests it. However, it has not publicly addressed the specific allegations regarding the unequal treatment of Democratic staffers in relation to the CLARITY Act.
As the bill continues its path through the House, all eyes are now on whether the SEC will comply with Waters’ June 6 deadline—and whether it will reestablish a sense of balance in the policymaking process.
Quick Facts
- Democratic aides say the SEC withheld technical analysis of the CLARITY Act while providing it to Republicans.
- The bill seeks to define regulatory roles between the SEC and CFTC and introduce new crypto market safeguards.
- Concerns have been raised about potential loopholes for traditional finance firms using blockchain.
- Rep. Maxine Waters is urging SEC Chair Gary Gensler to submit a full analysis of the bill’s risks and benefits by June 6.
- The House Agriculture Committee is also reviewing the bill, showing momentum across multiple legislative bodies.
