Senate Republicans have released a revised version of the CLARITY Act, which consolidates cryptocurrency market regulations previously handled by separate subcommittees. The draft maintains the original framework of dividing regulatory responsibility between the SEC and CFTC while introducing tougher rules for officials and exchanges.
Ethics Restrictions for Government Officials
A new ethics division applies to senior government officials, elected politicians, and their spouses. These individuals would be prohibited from accepting payments to issue or sponsor digital assets. Those with material interests in crypto companies would generally be required to sell their holdings or place them in a blind trust.
State attorneys general can enforce these restrictions. Violations may result in penalties of at least $500,000 or 20% of the money or financial interest involved, whichever is higher. Exchanges would also be prohibited from listing assets issued or sponsored in violation of these rules.
Stablecoin Rewards and Developer Protections
The revised draft permits interest payments connected to loyalty programs and rewards for stablecoins. However, it grants the Treasury secretary temporary authority to restrict such rewards if stablecoins trigger substantial deposit withdrawals from community banks. This authority expires 18 months after the bill's passage.
Republicans expanded legal protections for developers who do not control customer funds, and extended the same protections to miners and validators, preventing them from being automatically classified as money transmitters or financial institutions.
Exchange Conflict of Interest Rules
The bill establishes conflict-of-interest rules for crypto exchanges, generally prohibiting them from trading on their own platforms for their own benefit or their affiliates' benefit. Exceptions are permitted for hedging, handling defaults, and providing necessary liquidity. Existing state consumer protection, fraud, and anti-money laundering laws continue to apply.
Notable Changes
The revised draft removes the Anti-CBDC Surveillance State Act as standalone legislation. While the introductory language maintains restrictions on central bank digital currencies, anti-CBDC provisions are not reflected in the bill's operative text. The unrelated Build Now housing measure has also been removed from the legislation.
