Pfizer on Capitol Hill this Tuesday as the Senate prepares for a high stakes vote that could decide the future of U.S. digital asset regulation. At 215, lawmakers will hold a crucial cloture vote on the landmark Clarity Act, requiring 60 votes just to open for debate. And the vote comes on the heels of intense weekend negotiations, with Trump conceding to major portions of a bipartisan ethics plan regarding his personal crypto holdings.
Meanwhile, last night, Senate Democrats sending a counterproposal back to Republican lawmakers with their updated request for ethics language. And with 77 banking associations lobbying hard against stablecoin yields and the House preparing to leave town this Thursday. The margin for error is razor thin.
Well, joining us live on set here at the New York Stock Exchange is Cody Carbone, CEO of the Digital Chamber and a former Capitol Hill staffer. Cody, great to have you back. Thank you so much for joining us.
Thanks for having me, as always.
Well, there's a lot of focus on the nation's capital this week because we have that vote taking place later today, and that is something we've been waiting all summer for or all year for. And then we have the Federal Reserve taking place as well tomorrow afternoon. So what is the latest that you are hearing ahead of the vote?
It's a monumental first step. This is just a vote to advance debate. And it's not a vote on final passage, but it's critical. We need to get 60 votes. So there needs to be a bipartisan show of support for this bill for it to move forward. I'm cautiously optimistic. Democrats. Last night, as you mentioned, are preparing a counterproposal to send over to Republicans.
But in my conversations with Democrats, there was no, no, we're not doing this. It was we understand that Republicans have given us a lot. The white House has conceded a lot, specifically on ethics. I'm very optimistic that we'll have the votes today, this afternoon, which is exciting to get to 60 and advance this bill, move forward.
Yeah. So I think cautious optimism is key here, especially because there's been so much anticipation. And of course, when we're taking a look at prediction markets, we've been watching the odds play out here. So what are you most concerned about as we head into this afternoon?
It's the ethics. The ethics piece. Democrats have said that the ethics piece still falls short of their expectations. Now, it resembles about 80% of what Senators Tillis and Gallego had sent over to the white House earlier this year. Can we find, you know, that extra 20% to get all the Democrats over the finish line?
I'm hopeful, but the white House has conceded a lot here, and it's unprecedented for state attorneys general to be able to sue the federal government here if there is a violation of ethics. It's unprecedented for the president to say, hey, I'm going to put ethics protections on myself. I'm going to make sure that I can't trade or do anything in the digital asset space.
I'm hopeful that this was enough for Democrats. Democrats have been negotiating to the final, you know, minute here as we near the vote. And I'm hopeful that we can get the 60 votes needed.
Yeah. And Cody, when we take a step back, we know that there are a lot of moving parts here. There has been this discussion of what trad fi wants versus D5. But this year has been the year of institutional adoption. And we're talking about this here at the New York Stock Exchange. So we can't get more tread by than this.
But what are you concerned about when it comes to some of the conversations that are taking place when it comes to the financial institutions?
I'm really disappointed as it relates to this bill. As you mentioned, the institutions are the ones who have been building over the last year, year and a half. Some of the biggest banks are the largest employer of blockchain developers are the largest holder of blockchain patents. They need this bill.
I think that's not talked about enough, that there is a massive section in this bill about how banks can interact with digital assets, interact with permissionless blockchains. They want this bill. The biggest and the most contentious piece has been stablecoin yield and rewards. And if this bill doesn't pass, then there is no limitations on rewards.
There is a prohibition right now on any stablecoin yield or reward that resembles an interest bearing deposit. If this bill doesn't go through because the banks are saying it doesn't meet their expectations, then there is no prohibition and rewards will continue as is. The banks need to get behind this bill.
I think a lot of their efforts relates to deposit flight that they mentioned are unfounded. The white House actually came out the report this morning countering that and coming out with data. So I'm hoping the banks will buckle up. They want this bill. They know this bill. Obviously there's going to be competition here that will support this bill in the end.
Yeah. And Cody, while I have you here, can you tell us a little bit more about stablecoin yields and the discussions that are taking place, especially for viewers out there who may not be as familiar? So can you dispel some of the myths surrounding this?
Absolutely. So right now, if you're holding a stablecoin, let's say Usdc on Coinbase, you can get 3.5% reward. It looks kind of like a money market fund that you can get some of those interest payouts for. Holding or transacting banks have been very concerned about this. They say, hey, that will cause deposit flights specifically out of community banks and it will hurt our lending opportunities.
We don't want people taking money out of their banking institution and bringing it to an exchange where they can get a higher yield on their money. They are saying that deposit flight will end up killing community banks. There has been no data to back that up. We've actually found that they made the exact same arguments in the 1970s, when money market funds came to be at that.
It's strictly about competition they're building. They're going to offer their own stablecoins. They're going to offer their own rewards. They're trying to catch up to the crypto industry. So the white House, Senate Republicans have said, okay, if you are concerned about deposit flight, they've added new language to the new text of the Clarity Act saying, hey, there will be a circuit breaker here, that Secretary Scott Benson at the Treasury, if there is any evidence of deposit flight can stop, stablecoin rewards, can amend the language, can halt everything on the stablecoin side to make sure that we don't have deposit flight, and we can stop it right there.
The banks came out yesterday and said that wasn't good enough because they want to end stablecoin rewards. They want to make sure that no one is moving their money from traditional banking to the crypto space. And that's just unfair competition.
Yeah, and I do want to zoom out a bit because I want to get your perspective on how we're seeing U.S. innovation, as well as financial leadership in comparison to the rest of the globe. So I know you talked to many stakeholders in the US as well as outside of the US. So why do you think legislation is so important?
It's critical right now, especially just to start with the stablecoin side. 98% of stablecoins in circulation around the globe are US dollar back. Every single jurisdiction is trying to compete there. Whether it's a digital euro, it's digital yen, it's digital yuan. Everyone is trying to compete to take that share from the US dollar.
This genius act when we passed out was about dollar dominance, making sure all these jurisdictions around the world can get dollars in their hands. Whether you're in Latin America, you want an inflation hedge you can't access through your banking partners, just the US dollar, but you can get it through US dollar backed stablecoins and is a huge economic and national security play for the United States.
That was done through legislation. We need the Clarity Act because what the Genius Act did for a payments the Clarity Act is going to do for the rest of the market. If we truly want to see tokenization thrive 24 over seven markets, we want to see blockchain technology led by the United States. We need to pass a bill that will allow our institutions to feel comfortable building, not just for the next two years while we have a friendly administration, but for the next two decades.
Otherwise, every other jurisdiction around the world, specifically our adversaries. If you look at China, Russia, they are building fast and furious as it comes to this technology. We need to make sure we pass legislation so every company feels comfortable building here.
Yeah. And Cody, finally, before I let you go, we are counting down to a monumental Federal Reserve rate decision. The two day fed meeting kicks off today. We get the rate announcement tomorrow, and everybody is waiting with bated breath to hear from Fed Chair Kevin Warsh. So give us a sense of what institutional traders are looking at right now, especially as we count down to the cloture vote this afternoon and the fed rate decision.
As you mentioned, waiting with bated breath. Um, I think what our traders and the member companies that we work with, them just trying to see what will worship posture be? Yeah. You know, it seems like there's a lot of people. There's a consensus that he will raise rates, but will he go against the president because the president has been very clear on what he wants.
What will his posture be? We'll look a lot like the Jerome Powell era, where the fed will continue to be as independent as possible. We don't know. So this is going to be pretty illustrative and indicative of what the future will hold for the Federal Reserve. As we look to the Clarity Act vote this afternoon.
I think there's going to be a monumental growth in the industry. If we see that lawmakers are saying, you know what, this is a bipartisan bill, we're going to move this forward, and we're going to make sure the US is the crypto capital of the world. That starts today.
Yeah. And I'm sure you're looking long term versus short term. But there are a lot of conversations out there about where the crypto market stands right now as we head into Q4 of 2026. So what's your perspective and what are people saying on the ground?
It's moving away from theoretical and concepts. Yeah, I think crypto can be this. And I think it could be this. And that's really what's driven, you know, some of the fluctuations in the market, the volatility over the last decade. It's all been kind of this investment thesis. And now, as you mentioned, institutions are building using this technology.
It is becoming more mainstream finance. I think everything in finance will be on chain within the next decade. We're moving to 24 over seven markets. Our capital markets will all be built using blockchain technology. Crypto will be something that we still talk about, and there will always be a place for the bitcoins and the Solanas, but every single institution we'll be talking about tokenization, tokenizing their financial assets.
Tokenizing equities, tokenizing bonds. It's becoming mainstream finance every day. And there's this mass convergence between the two industries.
Well Cody, unfortunately I will have to leave it there. But I appreciate your time and all of your insights. I know today is a busy day for you, so thank you so much for joining us.
Thank you so much.
Thank you so much, Cody.
