Crucial Crypto Clarity Act Surges to Vote, Industry Holds Breath
A new draft of the crypto Clarity Act has emerged with key amendments, including new DeFi registration requirements and clearer guidelines for credit unions engaging with digital assets. The updated bill aims to establish regulatory oversight for digital assets, despite facing delays, lack of bipartisan support, and continued demands for further amendments ahead of its Senate vote.
A new draft of the long-anticipated crypto Clarity Act has been released, incorporating significant amendments ahead of an upcoming Senate vote. Key changes in this updated bill include a mandate for non-decentralized DeFi protocols to register with the CFTC, alongside new provisions governing how federal credit unions can engage with digital assets. Specifically, a decentralized finance application will fail the protocol test if its functionality can be controlled or materially altered by an individual, if it doesn't operate solely on pre-established transparent encoded rules, or if its use can be restricted or censored. Additionally, the act clarifies that a federal credit union is authorized to utilize a digital asset or distributed ledger system to perform, provide, or deliver any activity, function, product, or service it is otherwise legally permitted to offer.
This updated legislation comes after a series of delays, as lawmakers had initially hoped for a crucial vote on the crypto market structure bill in August before their five-week recess. The Senate is now scheduled to vote on the bill on September 15. Reports indicate that the bill currently lacks bipartisan support, with Senate Republicans beginning to circulate the revised legislation. The fundamental objective of the Clarity Act is to establish a comprehensive framework for formally dividing oversight between various regulators, clearly distinguishing which digital assets are classified as securities, commodities, or stablecoins—a set of rules that crypto industry executives have long advocated for.
Despite passing the House of Representatives last July, the bill faced significant stalls this year, primarily due to clashes between the banking lobby and crypto companies over the issue of stablecoin yield for customers. Furthermore, a new draft introduced in July addressed ethical concerns, proposing a ban on government officials promoting or profiting from crypto, a point that Democrats have previously criticized the Trump family for. Despite these recent changes and additions, a faction of Democrats has expressed that the bill remains insufficient and has demanded further amendments. Pro-crypto lawmakers, in turn, have criticized Democratic politicians they perceive as deliberately impeding the bill's progress. President Donald Trump has publicly urged lawmakers to finalize this legislation, stating in August that passing this "very, very powerful legislation" is essential for the U.S. to maintain its position as the "undisputed leader in Bitcoin and crypto."