The latest amendment to the Clarity Act: Will Democrats support it?

U.S. Senate Republicans make major amendments to the CLARITY Act to win Democratic support

U.S. Senate Republicans have made comprehensive changes to the CLARITY Act ahead of an upcoming procedural vote. The new 635-page text not only introduces ethics for public officials holding cryptocurrencies, but also gives new enforcement powers to regulators at the federal and state levels. Republicans hope to use these adjustments to gain enough Democratic support in a procedural vote held on Tuesday.

It is worth noting that the latest revision reshapes the ethics clause previously opposed by Democrats and aims to resolve core differences in the negotiations.

What new ethical codes will public officials face?

The bill, supported by President Donald Trump , establishes an ethical framework that limits public officials 'ability to issue or support such digital assets. In addition, the enforcement power of regulations is no longer limited to the Department of Justice (DOJ), and state attorneys general are also given corresponding enforcement authority.

This change responds to one of the main concerns raised by Democrats during the negotiations. Previously, Democrats had opposed the idea that the Justice Department was only responsible for enforcing the ethics clause. The background to the controversy involves public criticism of Trump and his family's concerns about financial activities in the cryptocurrency field. Cynthia Loomis, chair of the Senate Banking Committee's Digital Assets subcommittee, said the bill is now ready after lengthy bipartisan negotiations.

What do politicians who hold cryptocurrencies need to do?

The new ethics rules contain the core elements of the Tills-Garrago proposal. Under the rules, public officials with crypto-related financial assets of a specific size must sell those assets or transfer them to blind trusts.

The rules impose strict restrictions on all federal elected officials, judges and their spouses, and are designed to reduce potential conflicts between public officials 'personal crypto investments and the public interest. Loomis pointed out that the changes meet Democratic demands and that the bill should now be supported.

What does the Blockchain Regulatory Determinism Act (BRCA) section cover?

In the "Blockchain Regulatory Definiteness Act"(BRCA), the scope of application has also undergone important changes. The new regulations limit the scope of protection provided by BRCA to the areas of the Bank Secrecy Act and legal sanctions.

Provisions previously planned to cover criminal prosecutions have been removed from the text, including possible prosecutions under section 1960. However, the new scheme also includes miners and validators under protection, a key development for participants in the blockchain infrastructure space.

Why have stablecoins and exchange rules changed?

The section of the bill on the issuance of stablecoins has also been redesigned. The text adds the "circuit breaker" mechanism proposed by Tillis in July this year. The mechanism allows federal regulators to intervene when stablecoin activity causes large-scale outflows from community banks.

In addition, the restrictions on vertical integration are more stringent. The text also sets out rules regarding potential conflicts of interest between subsidiary transactions and digital commodity exchanges, brokers and dealers. Clearly stipulate that state consumer protection laws will continue to be effective, while emphasizing that the protection of developers will not invalidate derivatives regulation. Similarly, the rules of prediction markets will not be changed.

Why does the CEO of Coinbase support the CLARITY Act?

Coinbase CEO Brian Armstrong also announced his support for the CLARITY Act before the Senate vote. In an interview with CNBC's "Squawk Box Asia" program on September 10, he said the bill was ready for approval.

Coinbase executives said the draft bill has received support from law enforcement, banks and cryptocurrency companies. He also said that with this revision, regulatory issues that Coinbase previously believed were problematic have been resolved.

The latest version contains significant changes in both ethics and the regulatory framework for the cryptocurrency industry. A procedural vote in the Senate will be a critical stage in determining whether the bill can be moved further.

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