Clarity Act Gets New DeFi Rules as Senate Faces Crucial 60-Vote Crypto Showdown
Senate Republicans introduced an updated 630-page Clarity Act a week before a procedural vote to open the new market-structure bill up to more formal deliberation on the Senate floor. The new version includes new federal rules for certain crypto trading protocols. The Senate is likely to vote on the bill on Sept. 15.
Senator Cynthia Lummis said the bill retained more than 114 requests from Democratic colleagues and called it a bipartisan product; none of the Democratic senators had publicly committed to supporting the revised bill when it was announced. With 53 Republicans in the Senate, that means Democrats or independents would need to provide 7 votes to reach the threshold.
One important change is in respect of decentralized finance. The draft creates a new class of “non-decentralized finance trading protocol”, defined as persons or groups — acting in concert — that have direct or indirect control, or the ability to materially alter a protocol’s functions, operations or consensus rules. Protocols meeting that standard would need to register with the Commodity Futures Trading Commission.
Instructs the CFTC and Treasury Department to consider rules to acknowledge and differentiate protocols without a controlling party from platforms that are marketed as decentralized but have governance or upgrades executed by a known party. It applies the amended DeFi language to spot and cash transactions involving digital commodities.
Major policy differences, however, remain unresolved: The draft retains some ethical restrictions that bar government officials, employees and their spouses from issuing or sponsoring digital assets, but they are set to expire in January 2029.
Read More: CLARITY Act or 2030? Senator Lummis Warns US Crypto Regulation Could Face Years of Delay
Democratic lawmakers regard the limitations and enforcement as inadequate, given the scrutiny on the cryptocurrency holdings of President Donald Trump and his family.
Another issue is stablecoin rewards: banking groups have expressed concern that rewards for holding stablecoins could draw deposits from insured banks and thereby restrict bank lending.
Crypto companies have argued that incentives related to transactions should not be treated like interest on a standard savings deposit account. Each industry has attempted to influence the upcoming Senate vote.
It creates federal definitions of digital assets, places oversight of digital commodity spot markets with the CFTC, and reaffirms that the SEC has jurisdiction over digital assets when they are offered and sold as, or traded on, a security exchange.
Read More: Coinbase CEO Says CLARITY Act Vote Won’t Stop US Crypto Rules From Coming
If the Sept. 15 motion reached the 60-vote threshold, senators could debate and amend topics like DeFi, ethics, stablecoin incentives and regulatory jurisdiction, but it still would not send the legislation to the White House.
Because the House previously passed its own version of the legislation, both chambers must pass identical legislation before sending the bill to the president. The final vote may be very close.
