The revised CLARITY Act will target centralized (non-decentralized) DeFi operators

Revised CLARITY Act: Establish regulatory paths for specific non-"decentralized finance" crypto transaction protocols

A revised version of the CLARITY Act aims to establish regulatory channels for certain crypto transaction protocols in the United States that are not strictly "decentralized finance"(DeFi). The updated draft directs the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to develop rules on how eligible agreement controllers should handle core obligations such as registration, market conduct, information disclosure, record-keeping and supervision; at the same time, the Treasury Department will clarify how existing Bank Secrecy Act (BSA) requirements apply.

Immediate momentum for the measure depends on a key procedural step in the Senate. Senator Cynthia Lummis has issued the revised text ahead of the planned Senate process on September 15. However, 60 votes were needed to pass the bill-an arithmetic logic that means Republicans still need to win the support of at least some Democrats despite remaining differences on ethics provisions, anti-money laundering protections and stablecoin-related rewards.

Core Points

• Definition Standards: The revised CLARITY Act will define "decentralized financial transaction agreements" by focusing on whether control can materially change functions, rules, or transaction governance.
• Regulatory division of labor: The SEC and CFTC will develop activity-oriented rules covering registration, conduct, disclosure, record-keeping and supervision, while the Treasury Department will address the applicability of the Bank Secrecy Act.
• Software Exemption: The distributed ledger software itself does not need to be registered separately simply because it powers the protocol.
• Security participation does not constitute control: Participation in incident response or the Security Council itself is not considered "control" of the agreement.
• Voting threshold: Senate action is scheduled for September 15, but the bill needs 60 votes to move forward.

Goal of the new bill: Focus on "control" rather than just code

In the latest version posted on Senator Loomis's website,"Decentralized Financial Transactions Agreements" are tied to the actual power to change how the agreements operate. The text defines these agreements as those whose functions, operations or rules can be materially changed by individuals or coordinating groups.

This definition goes beyond the simple administrator role. It also covers protocols where controllers can restrict user access or where transactions are not entirely governed by transparent, pre-established code. In other words, the bill's regulatory focus is on whether there are substantial discretion or governance structures that can change the user experience or transaction outcomes, rather than automatically treating all on-chain activities as decentralized.

How regulators implement the framework

Under the proposal, the SEC and CFTC would be asked to establish activity-based rules for affected controllers. The categories of obligations specified in the bill include:

• Applicable Registration Requirements
• Code of Conduct for Operating or Controlling Qualified Agreements
• Disclosure Obligations
• Record retention requirements
• Supervisory expectations

The bill also assigns different roles to the Treasury Department. It will establish how existing Bank Secrecy Act obligations apply to controllers identified under the proposed definition, ensuring that anti-money laundering compliance is incorporated into broader regulatory packages rather than leaving it entirely to existing interpretations for agencies.

Limitations in the proposal: Software will not automatically register

A distinctive feature of the draft revision is that it does not require anything. The text points out that software and distributed ledger systems do not need to be registered in their own name simply because they are part of the agreement. This distinction is critical for developers and operators because it separates the underlying technology from the question of who can exercise control over the behavior of the agreement.

The bill also contains guardrail provisions for common operating practices. It stipulates that participation in incident response or the Security Council itself does not constitute control of the agreement. This can be important for organizations coordinating responses after a security incident, as they will not necessarily be seen as protocol controllers for regulatory purposes.

Why voting is difficult-and factors that may hinder progress

A revised version of the CLARITY Act appears ahead of the Senate procedural vote scheduled for September 15. According to reports of the measure, 60 votes were needed to push the bill through, which means that despite continuing differences on ethics, anti-money laundering protection and stablecoin rewards, Republicans still need the support of Democrats. Previous reports have pointed out that these issues have been major obstacles to reaching consensus (including issues about stablecoin gains and related ethical restrictions).

Industry response has been generally supportive, although some stakeholders acknowledge that key disputes have not yet been fully resolved. Ji Hun Kim, CEO of the Crypto Council for Innovation, called the vote a "critical moment" for digital assets, innovation and U.S. leadership in an interview. King emphasized the need for a framework that balances consumer protection with business conduct standards.

Coinbase CEO Brian Armstrong told CNBC that the CLARITY Act is "ready to get a yes vote." He said Coinbase's previous "issues that must be resolved" had been resolved, while negotiations on moral restrictions were still ongoing and appeared close to a solution-although Armstrong did not specify which terms had changed.

Despite this, it is reported that the moral component of the revised text remains largely unchanged from the previous version, although the moral component has been one of the main points of contention in the negotiations. Democratic Senator Ruben Gallego has previously warned against rushing to a Senate vote before lawmakers resolve disputes involving ethics and stablecoin gains, arguing a quick vote could lead to the wrong result.

Armstrong also hinted that if legislation fails to advance, regulators may turn to use existing powers for rule-making and innovation exemptions-a result that is likely to keep agreement operators in uncertainty in the near term.

The open question for market participants is whether the latest changes will be enough to attract the additional votes needed to reach 60 votes. If procedural votes fail, the industry may end up relying on agency-driven rulemaking rather than a clearer legal framework-an approach that may be slower, more uneven among regulators, and more dependent on changing enforcement priorities.

As September 15 approaches, readers should focus on how legislators define the concept of "control" in the debate related to ethics and stablecoins, and whether negotiators can translate statements of readiness into the specific legislative support needed to clear procedural thresholds.