US Lawmakers Propose New Rules for Controlled DeFi in Revised CLARITY Act
New rules for controlled DeFi platforms
A revised version of the CLARITY Act has been released, proposing new regulations for certain decentralized finance (DeFi) platforms. DeFi refers to financial services that use blockchain technology to operate without traditional middlemen like banks. The bill specifically targets "non-decentralized" protocols that are managed by specific people or groups.
Under the proposal, United States regulators would determine if these platforms must follow rules for securities, commodities, and anti-money laundering. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) would be responsible for creating new standards for registration and recordkeeping.
Key details of the proposal
- Regulators would define a protocol as "non-decentralized" if a person or group can change its rules or restrict users.
- The bill clarifies that platforms governed solely by transparent, pre-set computer code would not fall under these specific rules.
- Software and distributed ledger systems would not be required to register in their own capacity.
- The Treasury would establish how existing anti-money laundering laws apply to the people who control these platforms.
Specific requirements in the bill
The updated text, posted on Senator Cynthia Lummis’ website, explains that participating in a security council or emergency response team does not automatically mean a person controls a protocol. This provision aims to protect those who help keep systems safe from being labeled as operators.
The bill would require the SEC and CFTC to develop activity-based rules. These rules would cover how platforms conduct business, what information they must disclose to the public, and how they are supervised by the government.
Industry and political reactions
Coinbase CEO Brian Armstrong told CNBC that the bill is ready for a "yes" vote. He noted that several important issues raised by his company have been resolved. Ji Hun Kim, CEO of the Crypto Council for Innovation, called the upcoming vote a vital moment for American leadership in digital assets.
However, some lawmakers disagree. Democratic Senator Ruben Gallego warned against rushing the vote. He pointed out that disputes regarding ethics rules and stablecoin yields—which are digital assets designed to stay at a fixed value—have not yet been settled. Despite these negotiations, the ethics section of the bill remains mostly unchanged from previous versions.
What is confirmed
The revised text of the CLARITY Act is now public. It defines "non-decentralized" protocols based on whether they can be manually altered by a controlling group. The bill requires a procedural Senate vote to move forward, which is scheduled for mid-September. It will need 60 votes to advance.
What is still unclear
It is not yet known if the bill has enough bipartisan support to pass the 60-vote threshold. While industry leaders claim key issues are resolved, lawmakers like Senator Gallego suggest that significant disagreements remain. Additionally, it is unclear exactly which provisions were changed to satisfy industry concerns, as the ethics section appears the same as before.
What happens next
A procedural Senate vote is scheduled for September 15. If the bill does not advance, Coinbase CEO Brian Armstrong suggested that the SEC and CFTC could instead use their existing power to create new rules or grant exemptions for innovation.
