A revised version of the CLARITY Act would direct U.S. regulators to determine whether controllers of "non-decentralized finance trading protocols" must comply with securities, commodities, and anti-money laundering requirements.
The revised text, posted on Senator Cynthia Lummis' website, defines such protocols as those whose functionality, operation, or rules can be materially altered by a person or coordinated group. The definition also covers protocols whose controllers can restrict users or whose transactions are not governed solely by transparent, pre-established code.
Under the proposal, the Securities and Exchange Commission and Commodity Futures Trading Commission 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 independently. It also states that participation in an incident-response or security council would not, by itself, establish control over a protocol.
Path Forward and Industry Support
The revised text arrived ahead of a procedural Senate vote scheduled for September 15. The measure requires 60 votes to advance, meaning Republicans will need Democratic support despite continuing disagreements over ethics, anti-money laundering protections, and stablecoin rewards.
Crypto Council for Innovation CEO Ji Hun Kim called the vote a pivotal moment for digital assets, innovation, and American leadership. Coinbase CEO Brian Armstrong told CNBC that the CLARITY Act was ready to advance, stating that previously raised issues had been resolved, though negotiations over ethics restrictions remained active.
Armstrong noted that if the legislation does not advance, the SEC and CFTC could pursue rulemaking and innovation exemptions using their existing authority.
