- Revised CLARITY Act directs regulators to assess non-decentralized finance trading protocol controllers under securities, commodities, and AML laws
- Definition targets protocols materially altered by a person or group, restricting users, or lacking transparent code governance
- Senate vote set for Sept. 15 needs 60 votes; ethics disputes remain unresolved
- Coinbase CEO: bill is “ready to get a yes vote”
The revised CLARITY Act, posted on Senator Cynthia Lummis’ website, would direct the SEC, CFTC, and Treasury to decide whether controllers of non-decentralized finance trading protocols must follow securities, commodities, and anti-money laundering rules ahead of a Sept. 15 Senate vote.
The proposal defines a non-decentralized protocol as one whose functionality, operation, or rules can be materially altered by a person or coordinated group. It also covers protocols whose controllers can restrict users or whose transactions are not governed solely by transparent, pre-established code.
Under the proposal, the SEC and CFTC would develop activity-based rules addressing registration, conduct, disclosure, recordkeeping, and supervision. The Treasury would establish how existing Bank Secrecy Act obligations apply to affected controllers.
The bill specifies that software and distributed ledger systems would not be required to register in their own capacity. Participation in an incident-response or security council would not, by itself, establish control over a protocol.
The revised text arrived ahead of the procedural Senate vote, which requires 60 votes to advance. Republicans will need Democratic support despite disagreements over ethics, anti-money laundering protections, and stablecoin rewards.
Crypto Council for Innovation CEO Ji Hun Kim called Tuesday’s vote a “pivotal moment” for digital assets, innovation, and American leadership. Kim told Cointelegraph that the US needs a framework combining consumer protections with business conduct standards.
On Thursday, Coinbase CEO Brian Armstrong Bitcoin-by-2030-is-a-reasonable-target.html” rel=”nofollow noopener” target=”_blank”>told CNBC that the CLARITY Act was “ready to get a yes vote.” He said the “must-have issues” previously raised by Coinbase had been resolved, while negotiations over ethics restrictions remained active.
Armstrong did not specify which provisions had changed. The ethics section in the newly released text remained largely unchanged from the previous version despite being a main point of contention.
On Aug. 20, Democratic Senator Ruben Gallego warned against holding a vote before lawmakers resolved disputes involving ethics and stablecoin yield. “A fast vote gets you a fast result, but I’m not sure it’s the result you want,” Gallego said.
Armstrong said that if the legislation does not advance, the SEC and CFTC could instead pursue rulemaking and innovation exemptions using their existing authority.
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