Blab Crypto
Small Businesses Face Rising Costs as Congress Considers CLARITY Act, Crypto Lenders Push for Bank-Free Loans
Small firms across the United States are feeling the pinch from two fronts: a 4.2% year‑over‑year inflation rate and a new wave of tariffs that have pushed up the cost of imported goods. The U.S. Bureau of Labor Statistics released the inflation figure on June 10, 2026, noting that higher energy prices and a 25% duty on products from Iran’s trading partners—announced in January—have been key drivers.
The tariff, part of a broader sanctions package that also increased gasoline and diesel prices, has hit retailers that import food, apparel and machinery hard. Service‑based businesses that rely on fuel for transportation have likewise seen their operating costs climb, according to a report by Washington‑based think‑tank Wykot.
Against this backdrop, the Senate is preparing to bring H.R.3633, the CLARITY Act, to a floor vote. The bill, which has garnered support from more than 200 members of Congress, aims to lay down a regulatory framework for digital‑asset transactions and, as proponents argue, to create a “rules of the road for crypto in America.” The Senate’s Committee on Financial Services has scheduled a hearing for the end of the month, and a recent PYMNTS article described the bill’s progress as “moving closer to consideration.”
Crypto lenders see the CLARITY Act as a launchpad for a new lending model. Over 200 firms claim their platforms can provide loans directly from one digital wallet to another, bypassing traditional banks, credit unions and community‑development financial institutions (CDFIs). They contend that the process would be faster and cheaper, especially for entrepreneurs operating in the global economy.
Frank Knapp Jr., co‑founder and CEO of the South Carolina Small Business Chamber of Commerce, warns that such a shift could erode the local financial ecosystem. He notes that small businesses rely on capital sourced through banks and CDFIs, which in turn depend on deposits and government guarantees from the Small Business Administration (SBA). The SBA’s 7(a) loan program, for example, provides a partial guarantee that encourages lenders to extend credit to small firms.
Knapp explains that the SBA’s guarantee has historically enabled banks to lend up to 90% of a loan’s value, a mechanism that has helped small businesses secure financing even when private capital is scarce. He also points out that CDFIs serve underserved communities and rural areas where the concentration of local lenders is low. “Digital wallet holders in foreign cities have no stake in the economic health of a rural South Carolina town,” Knapp said.
The crypto‑lending narrative relies on artificial‑intelligence systems that can assess risk and make lending decisions. However, the article does not provide evidence that such systems have been tested at scale or that they can match the due‑diligence performed by local loan officers who understand the nuances of a community’s market.
Regulators have expressed caution. A recent report by the U.S. Treasury’s Community Development Financial Institutions Fund highlighted the importance of maintaining a robust pipeline of capital for CDFIs, especially after an executive order in March 2025 that directed the fund’s elimination “to the maximum extent consistent with applicable law.” The order has raised concerns that the removal of federal support could reduce the availability of credit for small businesses.
If the CLARITY Act passes, it would not only establish a regulatory framework for crypto but could also shift the balance of power away from traditional lenders. Without the same oversight applied to banks, small businesses could face a new set of risks, including reduced transparency and the potential for higher default rates.
The bill’s future remains uncertain. According to a LinkedIn analysis, the CLARITY Act has 200 backers but only a 60% chance of passing the Senate floor. Sponsors argue that it will foster innovation, while critics warn that it could erode the stability of the small‑business lending ecosystem.
In the coming weeks, the Senate will decide whether the CLARITY Act moves forward. The outcome will shape the regulatory environment for digital assets and could determine whether small businesses continue to rely on community‑based lending or shift toward a crypto‑driven model. Until then, small‑business advocates like Knapp remain skeptical of the promised benefits of a bank‑free lending system.
The tariff, part of a broader sanctions package that also increased gasoline and diesel prices, has hit retailers that import food, apparel and machinery hard. Service‑based businesses that rely on fuel for transportation have likewise seen their operating costs climb, according to a report by Washington‑based think‑tank Wykot.
Against this backdrop, the Senate is preparing to bring H.R.3633, the CLARITY Act, to a floor vote. The bill, which has garnered support from more than 200 members of Congress, aims to lay down a regulatory framework for digital‑asset transactions and, as proponents argue, to create a “rules of the road for crypto in America.” The Senate’s Committee on Financial Services has scheduled a hearing for the end of the month, and a recent PYMNTS article described the bill’s progress as “moving closer to consideration.”
Crypto lenders see the CLARITY Act as a launchpad for a new lending model. Over 200 firms claim their platforms can provide loans directly from one digital wallet to another, bypassing traditional banks, credit unions and community‑development financial institutions (CDFIs). They contend that the process would be faster and cheaper, especially for entrepreneurs operating in the global economy.
Frank Knapp Jr., co‑founder and CEO of the South Carolina Small Business Chamber of Commerce, warns that such a shift could erode the local financial ecosystem. He notes that small businesses rely on capital sourced through banks and CDFIs, which in turn depend on deposits and government guarantees from the Small Business Administration (SBA). The SBA’s 7(a) loan program, for example, provides a partial guarantee that encourages lenders to extend credit to small firms.
Knapp explains that the SBA’s guarantee has historically enabled banks to lend up to 90% of a loan’s value, a mechanism that has helped small businesses secure financing even when private capital is scarce. He also points out that CDFIs serve underserved communities and rural areas where the concentration of local lenders is low. “Digital wallet holders in foreign cities have no stake in the economic health of a rural South Carolina town,” Knapp said.
The crypto‑lending narrative relies on artificial‑intelligence systems that can assess risk and make lending decisions. However, the article does not provide evidence that such systems have been tested at scale or that they can match the due‑diligence performed by local loan officers who understand the nuances of a community’s market.
Regulators have expressed caution. A recent report by the U.S. Treasury’s Community Development Financial Institutions Fund highlighted the importance of maintaining a robust pipeline of capital for CDFIs, especially after an executive order in March 2025 that directed the fund’s elimination “to the maximum extent consistent with applicable law.” The order has raised concerns that the removal of federal support could reduce the availability of credit for small businesses.
If the CLARITY Act passes, it would not only establish a regulatory framework for crypto but could also shift the balance of power away from traditional lenders. Without the same oversight applied to banks, small businesses could face a new set of risks, including reduced transparency and the potential for higher default rates.
The bill’s future remains uncertain. According to a LinkedIn analysis, the CLARITY Act has 200 backers but only a 60% chance of passing the Senate floor. Sponsors argue that it will foster innovation, while critics warn that it could erode the stability of the small‑business lending ecosystem.
In the coming weeks, the Senate will decide whether the CLARITY Act moves forward. The outcome will shape the regulatory environment for digital assets and could determine whether small businesses continue to rely on community‑based lending or shift toward a crypto‑driven model. Until then, small‑business advocates like Knapp remain skeptical of the promised benefits of a bank‑free lending system.
