Senate Republicans Release Revised Clarity Act With New DeFi Registration Rules Ahead of Cloture Vote

Senate Republicans circulated a revised Digital Asset Market Clarity Act on Thursday, four days before the bill’s first test on the Senate floor. The 630-page text, released by Sen. Cynthia Lummis (R-WY) and fellow Republicans, rewrites how the legislation treats decentralized finance and credit unions. The ethics language that Democrats have made the price of their support is unchanged.

The draft creates a category of “non-decentralized finance trading protocols,” covering anyone who retains authority to control or materially alter a protocol’s functionality or consensus rules. Those protocols would have to register with the Commodity Futures Trading Commission, and the bill directs the CFTC and Treasury to write the rules. The DeFi provisions now reach only spot and cash digital commodity transactions, which Lummis said answers tribal governments’ concerns about blockchain-based prediction markets, and credit unions get clearer authority to deal in crypto. Lummis said the draft incorporates more than 100 provisions requested by Democrats.

The cloture vote on the motion to proceed is set for 2:15 p.m. ET Tuesday and needs 60 votes. At least two Republicans are expected to vote no on the procedural question, leaving the bill nine Democratic votes short. The ethics provision remains the primary concern for Democrats, one staffer was quoted as saying by Punchbowl News’ Brendan Pedersen and according to the staffer, the new text does nothing to resolve that. Republicans told Semafor this week that the bill is likely to fail, citing the same ethics concern. A defeat for Clarity Tuesday would leave few session days before the Nov. 3 midterms.

Banks pressed their own case shortly after the release of the new text. The American Bankers Association, the Independent Community Bankers of America and 77 state and regional banking groups asked Senate leaders to tighten Section 10404, the ban on paying interest or yield on stablecoins, arguing the current wording lets rewards pull deposits out of community banks. Paradigm‘s Alexander Grieve pushed back on X, calling the negotiated yield prohibition a loss for crypto rather than a win. Sens. Jerry Moran (R-KS) and Josh Hawley (R-MO) have said they would oppose the bill without bank-backed changes.

The bill cleared the Senate Banking Committee 15-9 in May and has been stuck on conflicts of interest since. A counterproposal from Sens. Thom Tillis (R-NC) and Ruben Gallego (D-AZ) in late July would bar federal elected officials and judges from issuing or sponsoring digital assets and require them to divest any existing holdings. The White House has not responded to it. The House canceled its final two September voting weeks, pushing any House action into the November lame duck.

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