U.S. Republican lawmakers have released a 630-page revised version of the CLARITY Act, which brings non-decentralized DeFi protocols under the CFTC registration scope. However, disputes over stablecoin yields and official ethics may still block the procedural vote on September 15.
Written by: ChandlerZ, Foresight News
On September 10, U.S. Senate Republicans released a 630-page revised text of the Digital Asset Market Clarity Act (CLARITY Act), preparing to rewrite the House-passed H.R.3633 in its entirety as a substitute amendment. Cynthia Lummis, chair of the Senate Banking Committee's Digital Assets Subcommittee, which is pushing the bill, said the new version incorporates more than 100 changes proposed by Democratic lawmakers.
The Senate will hold a cloture vote to start deliberations at 14:15 ET on September 15. This vote only determines whether the Senate can begin processing the bill, requiring 60 votes in support, and does not mean the bill has passed the Senate. The Block cited Politico as reporting that as of September 10, the new text had not yet received support from Democratic lawmakers.
The CLARITY Act seeks to define the regulatory boundaries between the SEC and CFTC for the U.S. crypto market. The House passed H.R.3633 in July 2025 with 294 votes in favor and 134 against, including 78 Democratic votes. The Senate Banking Committee advanced its own version in May this year with 15 votes in favor and 9 against. The 616-page text released in July merged the Banking and Agriculture Committees' proposals for the first time, and the September version adds 14 pages to that.
If the bill takes effect, digital commodity exchanges, brokers, and dealers will register with the CFTC and assume obligations such as customer asset segregation, conflict of interest management, transaction record-keeping, and bankruptcy protection. Securities and tokenized stocks will remain regulated by the SEC, and network tokens that meet the definition of "ancillary assets" will need to disclose project progress, token distribution, and related party holdings.
Non-Decentralized DeFi Protocols Gain CFTC Registration Pathway
The July text already required the SEC and U.S. Treasury to formulate rules for "non-decentralized financial transaction protocols" applicable to controllers engaged in securities brokerage, trading, execution, clearing, or custody activities. The September version adds corresponding arrangements in the Commodity Exchange Act section, assigning digital commodity spot business to the CFTC and requiring the CFTC to jointly formulate rules with the SEC and Treasury.
The new version lists three criteria for judgment: a protocol may fall into the "non-decentralized" category if it has a controller who can change its functions, operation mode, or consensus rules; transactions are not fully executed according to transparent rules pre-written in code; or someone can restrict, censor, or prohibit user access. Regulatory requirements are determined based on actual functions such as brokerage, trading, execution, clearing, and custody. The use of names like DAO, foundation, or open-source protocol by the team will not change the judgment result.
Protocol operators that retain upgrade keys, pause switches, transaction review rights, or asset control rights may need to assume CFTC registration, information disclosure, record-keeping, business supervision, and Bank Secrecy Act compliance obligations. Persons who merely run nodes, provide oracles, publish code, develop non-custodial wallets, or provide read-only interfaces will not be required to register with the CFTC solely for these activities; participation in a security committee or incident response alone will not be sufficient to be identified as controlling the protocol. The CFTC can still take enforcement actions against fraud, manipulation, and false reporting.
Further Clarify Regulation of Prediction Markets and Credit Unions
The September text limits CFTC-side DeFi protections to digital commodity spot and cash transactions. Prediction markets, which typically use event contracts, cannot automatically obtain DeFi exemptions through this clause. Lummis said this modification responds to concerns from Native American tribes that prediction markets bypass tribal gaming rights and state gaming rules. The bill does not directly rule on whether event contracts are gambling products, and disputes between CFTC authority, state laws, and tribal gaming agreements will continue.
The credit union clause has also undergone technical adjustments. Federal credit unions can use digital assets or distributed ledgers to conduct payment, lending, custody, or trading activities already permitted by law, and insured deposit credit unions can conduct business under the same conditions. The text also notes that this clause does not expand the existing statutory authority of credit unions nor exempt them from capital, risk management, and consumer protection requirements.
Stablecoin Yield and Official Ethics Clauses Remain Largely Unchanged
The new version continues to prohibit crypto service providers and their affiliates from paying passive interest or yields to U.S. users solely for holding payment stablecoins, while retaining rewards from real activities such as payments, transfers, exchanges, settlements, and liquidity provision. The SEC, CFTC, and Treasury must jointly formulate detailed rules within one year after the bill is signed into law. The banking industry wants to further restrict stablecoin rewards, while crypto platforms hope to retain transaction and usage incentives; the September text does not resolve the dispute between the two sides.
The official ethics clause also follows the July plan: public officials, federal employees, and their spouses cannot issue or sponsor digital assets in exchange for consideration during their tenure, but can hold digital assets as investments. Violations can only be pursued in civil litigation by the U.S. Attorney General; state attorneys general and private parties cannot sue. The ban will expire at noon on January 20, 2029. Democrats such as Elizabeth Warren previously called for expanding the scope of application and enforcement entities, but the new version does not make major adjustments.
Seven Democratic senators, including Mark Warner, Cory Booker, and Ruben Gallego, jointly stated in July that clauses related to official ethics, consumer protection, illegal finance, conflicts of interest, and market integrity still need to be strengthened. If 60 votes are not obtained on September 15, H.R.3633 will remain in the Senate, and the SEC and CFTC can only formulate rules separately based on existing authority. If the procedural vote passes, the Senate will still need to handle amendments and hold a final vote. Since the text passed by the Senate differs from the House version, the House still needs to accept the Senate text or the two chambers will negotiate a unified version before it can be sent to the president for signature. Most clauses of the bill are scheduled to take effect 360 days after being signed into law, and clauses involving the formulation of implementation rules will need to wait 60 days after the final rules are published.
