The CLARITY Act’s Latest Draft Is Here — Here Is What Changed And What It Means

Senate Republicans released the updated draft text of the CLARITY Act on Tuesday, moving the long-awaited crypto market structure bill closer to a Senate floor vote ahead of the August 7 recess deadline. 

Eleanor Terrett of Crypto In America, who has been tracking the negotiations closely, disclosed the key provisions on X while noting that the text was negotiated between the White House and Republican senators Cynthia Lummis and Bernie Moreno — and notably does not yet carry Democratic sign-off.

The Ethics Provision Is Here 

The most significant addition is an ethics package that attempts to address the central Democratic demand that has held the CLARITY Act back for weeks. 

The draft bans the president, vice president, members of Congress, federal judges, and other covered officials — along with their spouses — from issuing or sponsoring digital assets for compensation while in office. The ban carries a sunset date of January 20, 2029. 

Under the bill, covered officials would also be required to either divest their crypto holdings and investments in crypto companies or place them in a blind trust they do not control. 

The Department of Justice (DOJ) would have civil enforcement authority over ethics violations, including the ability to pursue exchanges that knowingly list prohibited tokens. 

The CLARITY Act also mandates disclosure of crypto sales above $1,000 and directs the Government Accountability Office to study additional ethics gaps.

Terrett flagged this section as the most likely to change. Democrats have said they have not yet seen the text and remain firmly opposed to giving the DOJ sole enforcement authority — their position is that state attorneys general must also have a role. 

Bipartisan negotiations are expected to continue in the coming days, meaning the ethics language in this draft is unlikely to survive unchanged into the final version.

CLARITY Act Adds Bankruptcy Protections 

On the Blockchain Regulatory Certainty Act (BRCA) provision, industry sources told Terrett the CLARITY Act text is unchanged from the version the Senate Banking Committee approved in May. 

The provision continues to protect non-custodial software developers and blockchain infrastructure providers from being classified as money transmitters simply because they build or maintain decentralized networks. The Keep Your Coins Act is also included, protecting individuals’ right to hold their own crypto in self-custody.

The stablecoin yield section is unchanged from the Banking Committee version, preserving the Tillis-Alsobrooks compromise that prohibits companies from paying interest on idle payment stablecoin balances while allowing rewards tied to actual activity such as transactions or staking, provided those rewards are not economically or functionally equivalent to interest on a bank deposit.

A new dedicated law enforcement section has been added to the bill’s latest draft. It increases funding for state and local crypto investigations and blockchain analytics tools, creates training programs for law enforcement and prosecutors, and establishes a cyber center to combat threats from nation-state actors. Stablecoin issuers would also be required to comply with lawful orders to freeze, seize, burn, and reissue tokens when appropriate.

The CLARITY Act also addresses what happens when a crypto exchange or custodian goes bankrupt — a provision that draws directly on the lessons of FTX’s 2022 collapse. 

Customer assets would receive protections equivalent to those applied to traditional financial assets, ensuring they remain the property of customers rather than becoming part of a failed company’s bankruptcy estate. The draft is out. Democratic negotiations are ongoing. August 7 has not moved.

Featured image generated with OpenArt.