Senate Republicans have unveiled significant revisions to the CLARITY Act, a comprehensive cryptocurrency market structure bill, in an effort to secure Democratic support for a procedural vote scheduled for Tuesday.
The updated 635-page legislation includes an ethics framework that restricts federal officials, judges, and their spouses from issuing or sponsoring digital assets. Under the revised provisions, affected officials must either divest substantial crypto-related holdings or place them in blind trusts. Both the Department of Justice and state attorneys general have been granted enforcement authority over these restrictions, addressing a key Democratic objection to earlier versions.
Key Revisions and Democratic Priorities
Senate Banking Digital Assets Subcommittee Chair Cynthia Lummis stated that the ethics section incorporates provisions from the Tillis-Gallego proposal and reflects negotiations over concerns regarding financial interests in the crypto sector. According to Lummis, President Trump agreed to the ethics restrictions voluntarily.
Changes to the Blockchain Regulatory Certainty Act now limit its scope to the Bank Secrecy Act and civil enforcement, removing language that would have extended protections to criminal proceedings. The revisions also bring miners and validators under BRCA protections.
Stablecoin and Market Structure Changes
The bill introduces a "circuit breaker" mechanism for stablecoins that would allow federal regulators to intervene if stablecoins were causing significant withdrawals from community banks. Stricter limits on vertical integration have also been incorporated, including rules governing affiliate trading and potential conflicts at digital commodity exchanges, brokers, and dealers.
The legislation confirms that state consumer protection laws remain in effect and specifies that developer protections would not override derivatives regulations or change rules governing prediction markets.
Industry Support
Coinbase CEO Brian Armstrong expressed support for the CLARITY Act on CNBC's Squawk Box Asia on September 10, stating the bill was ready for approval and claiming backing from law enforcement groups, banks, and crypto companies. Armstrong noted that Coinbase's main concerns with the legislation had been addressed.
