The Senate Banking Committee voted 15-9 on Thursday to advance the CLARITY Act, a proposal intended to shape the regulatory structure for crypto markets. The vote follows weeks of intense discussion about how best to regulate digital assets.
Shortly before the markup session, the Bank Policy Institute (BPI) published a series of posts on X highlighting estimates that illicit crypto flows reached $154 billion in 2025. Those figures injected fresh urgency into the debate over enforcement, stablecoin rules, and broader oversight.
Bank Advocates Lean on Crime Data
BPI’s timing underscored the policy stakes: senators were debating amendments related to stablecoin yield restrictions and enforcement standards as part of the CLARITY Act markup. Citing Chainalysis data, the institute said illicit crypto addresses received $154 billion in 2025, a 162% year-over-year increase driven largely by a 694% rise in value received by sanctioned entities.
The institute also pointed to growth in on-chain money laundering activity, from roughly $10 billion in 2020 to over $82 billion in 2025. According to the data BPI highlighted, stablecoins—primarily Tether (USDT)—accounted for 84% of illicit transaction volume by 2025, overtaking Bitcoin as the preferred payment method for many criminal actors.
In a related commentary, BPI noted that banks have devoted decades to building large anti-money laundering (AML) programs, while many crypto firms have operated with lighter regulatory obligations. The analysis argued that the GENIUS Act created some responsibilities for U.S.-based stablecoin issuers but did not fully encompass foreign issuers that serve U.S. customers. As an example, Tether’s incorporation in El Salvador places it outside certain domestic requirements, the piece said.
BPI also cited reported crypto activity by entities such as Iran’s Islamic Revolutionary Guard Corps, which some sources estimated to have handled more than $3 billion in 2025—an amount representing a significant share of that country’s crypto ecosystem by late 2025.
The institute warned that tools such as unhosted wallets, cross-chain bridges, and mixers are often designed to frustrate tracing and are openly marketed for that purpose. These concerns have intensified calls from banking groups for stricter AML and sanctions safeguards in crypto legislation.
The debate over stablecoins has emerged as one of the most contentious elements of the CLARITY Act negotiations. Banking organizations, including members of the American Bankers Association, lobbied heavily to tighten language that would restrict yield-bearing stablecoins. Reports indicated that banking groups sent thousands of letters to Senate offices ahead of the markup, while crypto advocacy groups mobilized extensive grassroots contact with lawmakers in support of the bill.
Despite more than 40 amendments proposed by Senator Elizabeth Warren and procedural disagreements during the hearing, the CLARITY Act moved forward with support from several Democrats, including Senators Ruben Gallego and Angela Alsobrooks.
The Counter-Argument
Not all industry observers accept BPI’s narrative. On May 14, Binance Research published findings that push back on the claim that illicit activity on-chain is simply accelerating unchecked. Their analysis suggests that a growing volume of illicit funds remains on-chain because fewer of those funds are successfully laundered and cashed out, rather than because more crimes are occurring.
Binance Research argued that stronger customer identification (KYC) at exit points and more frequent freezing of suspect balances by stablecoin issuers have reduced successful laundering opportunities. The report also noted that even the largest mixing services now process relatively limited volumes—on the order of millions per day—indicating constraints on the ability to move illicit proceeds at scale.
The clash between these perspectives—advocates urging stricter AML and sanctions parity for crypto, and industry analysts pointing to improved controls and constrained laundering channels—frames the broader policy fight over how to regulate stablecoins and other digital assets. As the CLARITY Act advances, lawmakers will continue weighing data, industry testimony, and enforcement priorities in shaping the final legislation.