Senate Republicans released a final revision of the CLARITY Act on Monday, incorporating more than 120 substantive changes requested by Democrats over the course of negotiations. The updated draft concentrates on four remaining disputes: ethics rules for federal officials, protections against stablecoin-related bank deposit flight, the scope of developer protections, and tighter regulations for digital commodity intermediaries.
Senators Cynthia Lummis, Banking Committee Chairman Tim Scott, and Agriculture Committee Chairman John Boozman unveiled the final text as Republicans made a last push for Democratic support ahead of a Senate vote. A cloture motion is set for Tuesday at 2:15 p.m., with Republicans planning to introduce the revised text as a substitute amendment if cloture succeeds.
Ethics and Stablecoin Provisions
The final draft addresses ethics concerns by giving state attorneys general a role in enforcing restrictions on federal officials with crypto interests. Covered individuals would be required to divest digital asset interests or place them in qualified blind trusts. Violations could result in civil penalties equal to 20% of transaction consideration or $500,000, whichever is greater. These provisions take effect 360 days after enactment or 60 days after implementing rules, whichever comes sooner.
For stablecoins, the revision adds a circuit breaker allowing the Treasury secretary to restrict rewards available to payment stablecoin holders if substantial deposit flight from community banks occurs. This authority expires 18 months after enactment. The broader compromise prohibits digital asset service providers from paying U.S. customers interest or yield solely for holding payment stablecoins, though activity- and transaction-based rewards may continue subject to rulemaking.
Developer Protections and Exchange Regulations
The final text narrows developer protections by removing language that could have extended safeguards into criminal money-transmission cases. Software developers remain protected from being treated as money transmitters under the Bank Secrecy Act, but references to federal criminal statutes covering unlicensed money-transmitting businesses were removed. Miners and validators are now included in these protections.
The Agriculture provisions impose stricter oversight on digital commodity exchanges, directing the Commodity Futures Trading Commission to write rules addressing conflicts of interest among affiliated businesses and entities holding multiple registrations. The approach gives the CFTC discretion to address conflicts through governance, disclosure, capital, and customer-protection rules rather than requiring separation of affiliated businesses.
Additional Regulatory Changes
The revision reduces the annual Regulation Crypto fundraising cap to $50 million from $75 million and establishes a $200 million lifetime limit. Originators raising more than $25 million must provide audited financial statements, while the ownership threshold triggering resale restrictions was lowered to 3% from 5%.
Law-enforcement provisions add new compliance requirements for digital commodity brokers, dealers, and exchanges under the Bank Secrecy Act and sanctions rules. Crypto kiosk operators would face registration, fraud-warning, and disclosure requirements, along with a 72-hour holding period for certain transactions by new customers. The bill also establishes a Digital Asset Cyber Innovation Center and authorizes $150 million for the Financial Crimes Enforcement Network and $150 million for a new CFTC Office of the Retail Commodity Advocate.
Path Forward
A successful cloture vote would advance the legislation to formal Senate consideration and debate rather than ensure immediate passage. The political outcome now depends on whether Democratic senators whose earlier objections prompted these revisions believe the final language addresses their concerns sufficiently.
