Clarity Act Gets New DeFi Rules as Senate Faces Crucial 60-Vote Crypto Showdown

Senate Republicans introduced an updated 630-page Clarity Act a week before a procedural vote to open the new market-structure bill up to more formal deliberation on the Senate floor. The new version includes new federal rules for certain crypto trading protocols. The Senate is likely to vote on the bill on Sept. 15.

Senator Cynthia Lummis said the bill retained more than 114 requests from Democratic colleagues and called it a bipartisan product; none of the Democratic senators had publicly committed to supporting the revised bill when it was announced. With 53 Republicans in the Senate, that means Democrats or independents would need to provide 7 votes to reach the threshold.

One important change is in respect of decentralized finance. The draft creates a new class of “non-decentralized finance trading protocol”, defined as persons or groups — acting in concert — that have direct or indirect control, or the ability to materially alter a protocol’s functions, operations or consensus rules. Protocols meeting that standard would need to register with the Commodity Futures Trading Commission.

Instructs the CFTC and Treasury Department to consider rules to acknowledge and differentiate protocols without a controlling party from platforms that are marketed as decentralized but have governance or upgrades executed by a known party. It applies the amended DeFi language to spot and cash transactions involving digital commodities.