A revised draft of the CLARITY Act released Thursday by Sen. Cynthia Lummis and fellow Republicans would require certain centrally controlled crypto trading protocols to register with the Commodity Futures Trading Commission, introducing new regulatory requirements as the Senate moves toward its first procedural vote on Sept. 15.
The 630-page revision represents the latest effort by lawmakers to establish federal regulation of the cryptocurrency industry for the first time. During negotiations, Lummis said Republicans accepted more than 114 provisions sought by Democratic colleagues.
New Non-DeFi Classification
Under the revised approach, protocols would fall into a "non-decentralized finance" category when an individual or coordinated group has authority to oversee functionality or make material changes to operations or rules governing consensus, whether exercised directly or indirectly through agreements or other arrangements. Entities in this category would be required to register with the CFTC.
A crypto industry source indicated that Democrats sought to include this new section. The legislation also directs the CFTC, together with Treasury, to issue regulations implementing the provision.
Additional Revisions
The draft limits relevant DeFi provisions to "spot and cash" transactions involving digital commodities, a restriction Lummis attributed to concerns from tribal governments about the legislation's potential impact on prediction markets.
The revision also includes clarifications regarding rules for credit unions engaging in cryptocurrency activities.
Ethics Provisions Remain Contested
The legislation continues to face disputes over ethics language addressing cryptocurrency holdings. In July, Trump accepted an ethics measure that would prevent government officials, public employees, and their spouses from sponsoring or issuing digital assets, with Justice Department oversight scheduled to expire in January 2029. Democrats have argued these protections are inadequate and have proposed alternative language alongside Republican Sen. Thom Tillis.
The latest draft leaves the ethics section largely unchanged, and the revised measure currently lacks Democratic backing, which is necessary for passage.
Path Forward
The legislation faces additional obstacles including disagreements between banks and the crypto industry over stablecoin rewards and concerns surrounding illicit finance. Lummis has used social media to press for passage as she approaches the end of her Senate career, noting she is not seeking another term and is due to leave Congress in January 2027.
