Clarity Act adds DeFi rule before Senate vote

Senate Republicans release a revised version of the Clarity Act to introduce federal regulation of specific crypto transaction protocols ahead of procedural vote

On the eve of a procedural vote scheduled for September 15, U.S. Senate Republicans released a revised 630-page draft of the Clarity Act. This version adds federal regulatory measures for certain crypto asset trading agreements.

bipartisan negotiates with core terms

Senator Cynthia Lummis, R-Wyoming, said on September 10 that Republicans absorbed more than 114 terms proposed by Democratic senators during the negotiation process. Loomis described the new version as the product of bipartisan cooperation, although no Democratic senators had publicly expressed support for the revised text when the draft was released.

This Senate vote is not a vote on final passage of the bill, but a procedural threshold that determines whether lawmakers can begin formal debate on the crypto market structure bill. Because Republicans have 53 seats in the Senate, they need the support of at least seven Democrats to meet the 60-vote procedural passage threshold set by the Senate.

Define "non-decentralized financial transaction protocol"

The new text establishes a classification called "non-decentralized finance trading protocol." The draft applies the term to individuals or coordinating groups who, directly or indirectly, have control and are able to materially change the functions, operations, or consensus rules of the agreement.

Agreements covered under this definition require registration with the Commodity Futures Trading Commission (CFTC). The bill directs the CFTC and the Treasury Department to develop implementation rules, leaving these agencies to determine how standards apply to different technology and governance arrangements. This clause is intended to distinguish systems that are not operated by a controlling party from platforms that, although advertised as decentralized, retain identifiable management or upgrade rights.

The issue of "control" has been at the heart of the Senate debate on decentralized finance (DeFi) regulation. Lawmakers are divided on whether software developers, interface operators and governance participants should assume financial compliance obligations without custody of customer assets. The latest text limits its DeFi terms to spot and cash digital commodity transactions. Loomis said the clarification responded to tribal governments 'concerns about whether the legislation would affect the forecast market, which could involve separate federal and state legal issues.

Ethics clause remains a voting obstacle for Democrats

The revised Clarity Act retains an ethics clause that prohibits public officials, government employees and their spouses from issuing or sponsorship Digital assets. Enforcement power still largely rests with the Ministry of Justice, but the restriction will expire in January 2029.

President Donald Trump accepted the clause in July, but Democratic lawmakers believed it was not strong enough. Their objections focused on the scope of coverage activities, limited enforcement mechanisms and expiration dates for terms. Trump and his family have financial connections to World Liberty Financial and TRUMP memecoin. Critics point out that legislation regulating the crypto market should contain stricter restrictions to regulate digital asset interests held by senior federal officials.

Previously, a separate ethics proposal developed by Democratic and Republican Sen. Thom Tillis sought stricter terms. Politico magazine reported that the September 10 revised version did not adopt the main elements of the alternative. As of the time of the report's release, there had been no support from any Democrats for the latest version. This lack of public commitment means that if the Senate is drawn along party lines, Republicans will lack the votes needed to start the debate.

Dispute over stablecin rewards and bank deposits continues

Banking groups and cryptocurrency companies continue to differ over stablecoin rewards. Banks believe that rewards paid based on stablecoin balances may encourage customers to move funds out of insured accounts, thereby reducing the amount of deposits used to support loans. Cryptocurrency companies argue that trade-based incentives are different from the interest paid to bank deposits. Early Senate language prohibited payments based solely on holding stablecoins, but allowed rewards associated with payments, loyalty programs and other eligible activities.

The disagreement sparked lobbying in the senators 'hometowns. According to reports, the Independent Community Bankers Association of America arranged meetings between local bankers and senators during its August recess. Meanwhile, Stand With Crypto, an advocacy group backed by Coinbase, said its supporters contacted members of Congress nearly 50,000 times during this period and held events and published articles in multiple states to support passage of the bill.

Some Republicans share Democratic critics 'concerns. Senators James Lankford and Mike Rounds reportedly questioned whether the bill would allow certain digital tokens to compete with traditional deposits. Democrats also cited other concerns related to anti- money laundering controls, consumer protection and market integrity. The revised agreement language resolved part of the illegal finance debate, but its release did not bring an announced agreement on the remaining controversy.

The September 15 vote only opens the debate process

Senate Majority Leader John Thune scheduled a procedural vote on September 15, the day after senators return to Washington. This vote requires the support of 60 senators to put the Clarity Act on the agenda of the plenary session.

A successful vote would allow debate and put the bill facing amendments. Senators could seek to amend ethics provisions, stablecoin reward rules, DeFi requirements, or allocate authority between the Securities and Exchange Commission (SEC) and the CFTC. The legislation would create a federal classification for digital assets and divide regulatory powers into two market regulators. The CFTC will gain spot market jurisdiction over assets classified as digital commodities, while the SEC will retain jurisdiction over securities.

The House has previously passed its version of the Clarity Act and has support from members of both parties. Any changes passed by the Senate require both houses to approve the exact same text before the legislation can be submitted to President Trump for signature.

Time is running out as lawmakers prepare for November's midterm elections. Cryptocurrency companies reportedly view the remaining 2026 legislative agenda as a key opportunity, while analysts believe the bill's future is full of uncertainty due to opposition from Democrats and some Republicans.

Loomis, who is leaving office in January 2027 and is not seeking re-election, continues to urge lawmakers to approve the measure. In a statement on September 9, she said the United States should develop its own encryption rules rather than allowing jurisdictions such as Singapore or the United Arab Emirates to take the lead.

"We have not ceded the Internet to Europe, and we cannot afford to cede digital assets in the same way. The Clarity Act allows the United States to make these rules rather than watching Singapore or the United Arab Emirates make them for us. Our country has a long history of..."

If the motion receives at least 60 votes, Senate leaders can continue the debate and schedule a vote on the amendment. If the votes are less than 60, the Senate will not be able to move forward with the current bill unless leaders negotiate new terms and schedule another procedural attempt.