Senate Republicans, led by Senator Cynthia Lummis, have released a 630-page revised draft of the Clarity Act. The legislation, which seeks to establish the first comprehensive federal regulatory framework for digital assets in the United States, faces its initial procedural vote on September 15 as the Senate returns to Washington.
The revised draft introduces new regulatory requirements for “non-decentralized finance trading protocols”. The bill defines these entities as any person or group acting in concert with the authority, exercised directly or indirectly through contracts, arrangements, or relationships, to control or materially alter the functionality, operations, or consensus rules of a protocol. Under the new text, non-DeFi trading protocols must register with the Commodity Futures Trading Commission (CFTC), with both the CFTC and the Treasury Department directed to draft implementing regulations. According to an industry source, this section was incorporated at the request of Democratic lawmakers.
Additionally, the update narrows the scope of DeFi provisions to apply exclusively to “spot and cash digital commodity transactions”. Senator Lummis stated this adjustment responds to concerns raised by tribal governments regarding potential impacts on prediction markets. The revised draft also includes technical clarifications regarding how federal and insured credit unions conduct cryptocurrency activities.
Senator Lummis noted that Republicans incorporated over 114 individual provisions requested by Democrats to build a bipartisan product. She emphasized that statutory legislation provides lasting certainty compared to shifting agency rulemaking across presidential administrations.
Ethics Sticking Points and Political Path Forward
Despite the inclusion of Democratic requests, the bill faces an uncertain path to securing the 60 votes required to pass its procedural hurdle. Politico reported that the updated text has not secured formal support from Senate Democrats.
A primary point of contention remains the bill’s ethics provisions regarding executive branch officials’ digital asset holdings, particularly President Donald Trump’s equity in World Liberty Financial and his TRUMP memecoin. In July, President Trump agreed to an ethics provision barring public officials, federal employees, and their spouses from issuing or sponsoring digital assets. However, enforcement of this restriction rests exclusively with the Department of Justice, rather than state attorneys general, and is set to expire in January 2029.
Democrats, along with Republican Senator Thom Tillis, criticized this framework as insufficient and submitted alternative ethics language. The September 10 revised draft left the July ethics framework largely unchanged, leaving the dispute unresolved ahead of the vote.
Additional hurdles stalling the legislation over the past year include disputes between traditional banks and crypto firms over payment stablecoin yield distributions, alongside broader concerns regarding illicit finance controls. With Senator Lummis set to leave Congress when her term ends in January 2027, lawmakers face a narrowing legislative window to advance the bill before the current session expires.
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