New Clarity Act Draft Tweaks DeFi and Credit Union Provisions Ahead of Senate Vote

Senate Republicans Release Updated Clarity Act Draft

Senate Republicans shared a new version of the Clarity Act on Thursday. This bill aims to set rules for how U.S. regulators oversee cryptocurrencies. The draft changes provisions for decentralized finance (DeFi) firms and credit unions dealing with digital assets.

The Senate returns from its August recess next week and is scheduled to hold its first procedural vote on Tuesday, Sept. 15. The vote requires 60 Senators to support it, meaning both Democrats and Republicans must agree.

Key Changes and Vote Timeline

• The new draft adds requirements for DeFi projects, such as when they must register with the Commodity Futures Trading Commission (CFTC) and follow Bank Secrecy Act rules.
• It specifies that DeFi rules apply only to spot-market and cash transactions in digital commodities, not to prediction markets.
• Credit unions gain clearer guidelines on their role with digital assets.
• The bulk of the bill resembles earlier versions, with over 114 provisions added at Democrats' request.

Senator Lummis Advocates for Bipartisan Legislation

Republican Senator Cynthia Lummis, a chief negotiator on the bill, supported moving forward with the legislation. She argued that rules set by Congress would provide lasting solutions, unlike regulations from agencies like the CFTC and SEC, which could change with administrations.

Lummis said the latest draft includes clearer DeFi provisions and credit union clarity. She emphasized that the bill is a bipartisan product built on years of negotiation.

White House and Banking Associations Respond

White House crypto adviser Patrick Witt urged all Senators to vote on Tuesday to advance the bill and continue the legislative process. Treasury Secretary Scott Bessent similarly called for lawmakers to agree to the motion to proceed.

Banking groups, including the American Bankers Association and 77 state banking associations, sent an open letter to lawmakers. They called for greater restrictions on rewards that stablecoin companies can offer, citing concerns about yield and rewards.

Confirmed Details from the Draft

The Clarity Act draft includes specific changes to DeFi and credit union rules. The cloture vote is scheduled for Sept. 15, needing 60 votes to advance. Republicans and Democrats have been negotiating the bill for years.

Confirmed sources include Senator Lummis's statements and the circulated draft text. The banking associations' letter and officials' posts on social media are also reported.

Unresolved Issues and Uncertainties

It is unclear if the bill has enough votes to pass the procedural vote. Democrats have demanded a bipartisan ethics provision to restrict senior government officials, including the president, from profiting from crypto businesses. Republicans, including Senator Thom Tillis, noted that the White House still needs to engage on this ethics proposal.

Without agreement on ethics, key Democrats have said they won't support the bill. Some Republicans have also expressed concerns about other elements.

Significance of the Clarity Act for Cryptocurrency

The bill is seen as a necessary step for maturing the cryptocurrency industry in the U.S. It aims to provide clear regulatory frameworks, which supporters argue would shield the industry from changing administrations.

Industry groups like the Digital Chamber stressed that the Senate must act to maintain U.S. leadership in digital asset and blockchain innovation. Without the bill, regulators like the CFTC and SEC will set rules independently.

Upcoming Legislative Steps

The first procedural vote is set for Tuesday, Sept. 15. If the vote succeeds, the legislative process continues with further negotiations. White House and Treasury officials have called for senators to proceed with the vote to keep the process alive.

Sources

• CoinDesk