CLARITY’s crunch time: Senate draft seeks to settle familiar fights

Authors of this article include Joshua Ashley Klayman, Sarah Shtylman, J. Dax Hansen, James Q. Walker, Samuel Boro, Etay Katz, and Gabe Khoury.

Key takeaways

• Stablecoin rewards: Activity-based rewards survive, but deposit-like yield does not. Section 10404 would ban interest or yield on stablecoin balances while preserving genuine activity-based and transaction-based rewards, with joint SEC, (Commodity Futures Trading Commission) CFTC, and U.S. Department of the Treasury rulemaking within one year. Who should care: stablecoin issuers, exchanges, wallets, payment companies, and loyalty-program operators. Read more.
• DeFi turns on control: Software development, validation, and infrastructure activities receive express protection, and non-decentralized protocols are defined by who can control or censor them, but interface providers remain unaddressed. Who should care: protocol teams, decentralized autonomous organizations (DAOs), developers, front-end operators, and wallet providers. Read more.
• New ethics rules for public officials: Public officials and their spouses could not issue or sponsor digital assets for consideration during the term of service, with a listing ban for intermediaries and a sunset in January 2029. Who should care: digital asset intermediaries and anyone launching tokens connected to public figures. Read more.
• A CFTC market-structure regime: Registration regimes apply for exchanges, brokers, dealers, and advisers, together with a qualified digital asset custodian framework, provisional status ahead of final rules, and a general bar on exchanges trading for their own account with limited exceptions. Who should care: trading platforms, intermediaries, and vertically integrated groups. Read more.
• Banks and state custodians get a clearer runway: Banks and credit unions could use digital assets and distributed ledgers for otherwise permissible activities, and a federal floor would let state-supervised custodians provide custody to the same extent as national banks. Who should care: banks, credit unions, trust companies and state-chartered custodians. Read more.

With many Congressional lawmakers reportedly pushing to pass the Digital Asset Market Clarity Act (the CLARITY Act) before the August recess, the newest Senate draft, published on July 22, 2026, is more than a technical consolidation of earlier Banking and Agriculture Committee drafts. It is an effort to resolve several of the most contested issues in U.S. digital assets regulatory policy.

The new draft advances the conversation in at least three areas that have divided banks, digital asset businesses, consumer advocates, developers, and policymakers: third-party stablecoin rewards, the treatment of decentralized finance (DeFi) and software developers, and digital asset ethics restrictions for government officials. In addition, new consumer protection, law enforcement, and cybersecurity provisions highlight that the current Senate draft has a broader focus than merely market access and regulatory classification.

None of these compromises will satisfy every stakeholder. That is likely the point. The revised draft appears designed to give legislators enough policy movement to build a coalition, while preserving the bill’s larger objective: establishing a workable federal framework for digital asset issuance, trading, custody, banking, and market integrity.

Uniting Banking and Agriculture Committee drafts

In the Senate, the bill had been developing on distinct legislative tracks. The Banking Committee draft addressed securities law treatment, stablecoins, banking, DeFi, custody, consumer protection, and related issues. The Agriculture Committee draft focused on CFTC authority over spot digital commodity markets and the registration and supervision of exchanges and intermediaries.

The July 22 CLARITY Act draft combines those efforts into a single bill with four divisions:

• Division A: Securities, banking, stablecoins, illicit finance, DeFi, software developers, customer property, and related matters
• Division B: The Digital Commodity Intermediaries Act, establishing the CFTC framework for digital commodity spot-market intermediaries
• Division C: New digital asset ethics requirements
• Division D: A consolidated effective-date framework

That consolidation of the two committees’ bills matters, because, in practice, digital asset businesses do not operate in separate “SEC,” “CFTC,” “banking,” and “stablecoin” universes. While the House-passed bill and earlier proposals spanned both securities and commodities jurisdiction, the Senate legislation had until now advanced as separate Banking and Agriculture Committee texts; the July 22 draft is the first single Senate text in this process to combine them.

In the future, a single exchange may list both securities and digital commodities, custody payment stablecoins, facilitate staking, provide wallet functionality, connect with DeFi protocols, and serve customers through affiliated entities. The current CLARITY Act draft attempts to regulate that reality.

Stablecoin compromise: Permitting certain activity-based rewards but not deposit-like yield

Among the most commercially significant provisions is Section 10404, which addresses compensation paid by digital asset service providers in connection with payment stablecoins.

The policy conflict is a familiar one. Banks and credit unions have argued that stablecoin rewards can operate as deposit substitutes if platforms pay customers for simply holding stablecoins. Digital asset-focused businesses and teams have responded that a broad prohibition could prevent ordinary loyalty programs, transaction rebates, merchant incentives, and rewards tied to network participation or genuine activity. For background on the yield debate under the GENIUS Act, see our earlier update on the OCC’s proposed regulations addressing stablecoin interest, yield, and rewards.

The revised draft seeks to draw a line between those models and would prohibit a covered digital asset service provider from paying interest or yield to a U.S. customer or user:

• Solely in connection with holding the customer’s payment stablecoins
• On a stablecoin balance in a manner that is economically or functionally equivalent to interest or yield on an interest-bearing bank deposit

Importantly, the draft preserves the possibility of activity-based or transaction-based rewards that are not economically or functionally equivalent to deposit interest. It directs the SEC, CFTC, and Treasury to undertake joint rulemaking within one year and to provide a nonexhaustive list of permissible programs.

The draft specifically identifies potentially permissible incentives connected to:

• Payments, transfers, conversions, remittances, settlement, and acceptance or use of a payment stablecoin
• Providing liquidity for market-making activity, posting collateral in connection with trading, or otherwise putting assets at credit or investment risk
• Use of a product or service, including governance, validation, staking, loyalty, promotional, subscription, or incentive programs

A key addition is that permissible rewards may be calculated by reference to a balance, duration, tenure, or combination of those factors. That language may provide needed flexibility for loyalty and participation programs, but it does not create a free pass for stablecoin yield products.

The test is intended to be functional and economic. A program labeled a “reward” could still be prohibited if it operates like interest paid for leaving a stablecoin balance on a platform. The bill also includes anti-evasion authority, marketing restrictions, mandatory plain-English disclosures, and potential civil monetary penalties of up to $5 million, imposed by the Treasury, for knowing and willful violations. A good-faith reliance safe harbor would protect a covered party that structures a program in good-faith reliance on the statute and implementing rules, provided the covered party comes into compliance within 90 days of a contrary determination and the violation is not substantially similar to a past violation.

Real world implication: Stablecoin issuers, exchanges, wallets, payment companies, and loyalty-program operators should begin inventorying each program that provides cash, tokens, rebates, credits, benefits, or other consideration connected to stablecoin balances, holding periods, use, or retention. The program’s label will matter far less than its economics, funding source, marketing, and actual user requirements.

DeFi: Sharper focus on control

DeFi regulation has been another key topic of debate, with previous legislative proposals raising concerns from some that developers, validators, interface providers, governance participants, and infrastructure providers could be swept into securities, commodities, Bank Secrecy Act, or money-transmission obligations based on their connection to open-source protocols and software and peer-to-peer activity.

The revised draft retains and expands protections for specified software and infrastructure activities. For example, it provides that a person should not be subject to securities law requirements solely for activities such as:

• Compiling, relaying, searching, sequencing, or validating network transactions
• Providing computational work, operating nodes, or oracle services or providing network bandwidth and comparable incidental services
• Developing, publishing, or constituting distributed ledger systems
• Developing or publishing self-custody wallet software and related systems

The draft also incorporates the Blockchain Regulatory Certainty Act concept that a noncontrolling developer or provider should not be treated as a money transmitter merely because it develops, publishes, maintains, or supports software, as long as such developer or provider lacks the legal right and unilateral, independent ability to control, initiate, or effectuate transactions involving user assets.

These protections are not comprehensive, however. While the draft addresses developers, validators and infrastructure providers, it is less clear whether it covers certain governance participants involved in operating, updating, and securing networks, and it does not squarely address interface providers. Absent guidance in the act or from regulators, a company that provides a user interface to a protocol or entity engaged in brokerage activity may remain exposed to federal and state claims that it is acting as an unregistered broker-dealer.

Importantly, the draft does not treat the word “decentralized” as a complete answer. Instead, it directs the SEC, in consultation with Treasury, to establish rules for “non-decentralized finance trading protocols.” The analysis turns on whether a person or coordinated group can control or materially alter protocol functionality, operation, or consensus rules; restrict, censor, or prohibit use; or cause the protocol to operate outside predetermined, transparent, and nondiscretionary rules.

The draft gives specific attention to emergency cybersecurity powers. For instance, while a narrowly tailored, pre-established, temporary, rules-based, and publicly disclosed cybersecurity response mechanism alone would not establish common control or acting in concert, such emergency powers could not be used for ordinary protocol upgrades, governance decisions, or economic changes unrelated to the relevant cybersecurity incident or imminent threat.

This reflects a more sophisticated approach than simply asking whether code is open source or whether a protocol uses a decentralized autonomous organization. The revised draft asks who has meaningful power and how that power works in practice.

Real-world implication: Protocol teams, foundations, decentralized autonomous organizations, security councils, governance delegates, frontend operators and service providers should document their actual authorities. Key questions include who can upgrade code, pause contracts, block transactions, control treasury assets, operate interfaces, determine listings, access or direct user assets and respond to cyber incidents.

New ethics provisions

Division C would impose restrictions on certain public officials and employees and their spouses, issuing or sponsoring digital assets for consideration during such officials’ or employees’ term of service.

The provisions would cover creating, minting, or launching a specific digital asset and directing, or exercising control over, the initial offer, sale, or distribution of a specific digital asset. They would also cover entering into agreements to fund, organize, or publicly endorse or advocate for the creation, launch, or express promotion of a specific digital asset, as well as agreements permitting use of an official’s name, image, likeness, office, or official position in connection with that activity.

A digital asset intermediary would be restricted from listing a digital asset determined to have been issued or sponsored in violation of the prohibition. The Attorney General alone could bring civil enforcement actions, with no state enforcement or private right of action, and the provisions contemplate disgorgement plus capped civil penalties for knowing and willful violations: up to the lesser of 10% of the consideration received or $500,000 for covered individuals, and up to $250,000 per violation, per day, for intermediaries.

The draft includes important limitations and safe harbors. For example, it does not prohibit officials from holding digital assets as investments, subject to generally applicable disclosure and conflict-of-interest rules. Similarly, the draft does not prohibit statements or official action on digital asset policy, legislation, or regulation where not made in expectation of consideration. Preexisting interests may be addressed through divestment or a qualified blind trust.

Notably, the ban would sunset at noon on January 20, 2029, and would extinguish liability even for pre-sunset conduct; the new financial disclosure requirements for digital assets sold for remuneration would survive. The inclusion of a sunset may reflect the political sensitivity of the issue and the effort to maintain momentum for the broader market-structure package.

Refining the treatment of network tokens and ancillary assets

Beyond the headline disputes, the bill’s core securities-law framework continues to be refined.

The revised text defines a “network token” as a digital commodity intrinsically linked to a distributed ledger system that derives, or is reasonably expected to derive, value from use of that system. It defines an “ancillary asset” as a network token whose value depends on the entrepreneurial or managerial efforts of an ancillary asset originator or related person.

The central concept remains that a transaction may involve an investment contract even where the token itself may be treated in the future as a non-security for specified purposes.[1]The revised draft also provides additional detail concerning:

• What constitutes a gratuitous distribution
• Programmatic distributions, including staking, liquid staking, custodial staking services, and rules-based network-participation distributions
• Certification processes for demonstrating that a network token is not an ancillary asset
• Disclosure obligations for ancillary asset originators
• Related-person resale limitations and reporting requirements; and
• Certification that a distributed ledger system is no longer under coordinated control

The CLARITY Act’s proposed “Regulation Crypto” exemption also remains a central feature. It would direct the SEC to establish a tailored exemption for certain investment contract transactions involving ancillary assets, subject to disclosure, public availability of information, eligibility requirements, bad-actor restrictions, and anti-fraud liability.

The implications are significant. Rather than eliminating the need to analyze tokens, the CLARITY Act, in a sense, would embed it. Issuers and market intermediaries would need to assess an asset’s rights, distribution, originator activity, control structures, disclosures, network functionality, and secondary-market context throughout the asset’s lifecycle.

Operationalizing the CFTC-focused framework

The updated draft bill provides a more detailed focus on the CFTC’s jurisdiction. It would establish CFTC registration and supervisory regimes for digital commodity exchanges, digital commodity brokers, digital commodity dealers, digital commodity pool operators, and digital commodity trading advisors. It would separately establish a qualification framework for digital asset custodians, under which a person may be considered a qualified digital asset custodian based on supervision by an eligible federal, state, or foreign regulator.

It bears emphasis that the draft would create distinct CFTC registration regimes keyed to defined activity types, including digital commodity exchanges, digital commodity brokers, digital commodity dealers, digital commodity pool operators, and digital commodity trading advisors. Associated persons of these intermediaries would be subject to separate registration requirements. Custody is treated differently. Section 5j(a) provides that a person “shall be considered a qualified digital asset custodian” if they hold digital assets for a CFTC registrant or its customer and satisfy the applicable supervision, information-sharing, and other statutory requirements.

A custodian may satisfy the supervision requirement through oversight by an eligible federal banking agency, the National Credit Union Administration, the SEC, a qualifying state supervisor, or a comparable foreign authority. Section 5j(c)(3)(A) separately directs the CFTC to establish rules under which a person already registered with the CFTC may also register as a qualified digital asset custodian. The provision therefore operates principally as a qualification or designation framework, with CFTC registration available as a separate pathway for existing CFTC registrants, rather than as a universal registration requirement for all qualified digital asset custodians. Digital commodity brokers and dealers would be required to hold each unit of customer digital commodities in a qualified digital asset custodian. Much of the rest of the framework flows from this architecture.

Among notable features is a notice-of-intent-to-register process and provisional status for exchanges, brokers, and dealers before permanent registration rules are complete. This transitional framework is designed to avoid a regulatory vacuum, but it comes with meaningful obligations, including:

• Customer disclosures and fair, balanced communications
• Books and records, examination, and reporting
• Financial responsibility and customer-asset safeguards
• Operational resilience and cybersecurity controls
• Conflict-management requirements
• Membership in a registered futures association for covered brokers and dealers
• Restrictions and conditions relating to listings and delistings

The draft bill also more directly addresses vertically integrated business models. It would generally prohibit a digital commodity exchange or affiliate from trading for its own account on the exchange, while providing limited exceptions for customer-directed activity, liquidity provision, risk-mitigating hedging, operational needs, and functional use of a distributed ledger system. The CFTC would need to establish conditions, disclosure requirements, information barriers, and reporting standards around those exceptions.

An important question for banks and trust companies is how the new CFTC registration regimes and qualified digital asset custodian framework interact with digital asset activities that banking regulators already permit. The draft contains conditional carve-outs rather than a blanket exemption. A bank, as defined in the Securities Exchange Act, would fall outside the digital commodity broker and digital commodity dealer definitions when engaging in certain banking activities in the same or a similar manner as under the securities-law bank exceptions in Sections 3(a)(4) and 3(a)(5) of that act, but only as determined by the CFTC, which leaves the perimeter of those exceptions to future rulemaking.

There is no parallel bank exception in the digital commodity exchange definition, although the CFTC would have general authority to exclude persons or classes of persons from each category. Whether a particular trust company fits the Exchange Act definition of a bank, and how closely the CFTC hews to the familiar securities push-out framework, will therefore determine whether institutions currently conducting exchanging or brokerage activity under the Office of the Comptroller of the Currency (OCC) or state banking authority would need a new CFTC registration after enactment. Custody is the clearest lane under this qualification framework: Banking-supervised institutions can serve as qualified digital asset custodians through their existing regulators without separate CFTC registration, subject to information-sharing obligations to the CFTC.

As such, the current draft reflects that some of the most difficult market-structure questions often arise not from technology itself, but from conflicts among trading, custody, market making, listing, principal activity, and customer protection within integrated groups.

Clarifying banking and custody provisions

The revised Banking Committee text would expressly permit national banks, state banks, financial holding companies, financial subsidiaries, federal credit unions and insured credit unions to use digital assets and distributed ledger systems to perform those activities that they otherwise are permitted by law to conduct.

The illustrative list is broad and includes custody, safekeeping, staking-related services, governance services, digital asset lending, collateralized lending, payments, node operation, self-custody wallet software, derivatives, brokerage, clearing, execution, riskless-principal transactions, and limited principal activity for operational, treasury, liquidity, settlement, and risk-management purposes.

The draft bill, however, does not eliminate prudential regulation. Instead, it preserves applicable safety-and-soundness, consumer-protection, capital, liquidity, and supervisory requirements. It also confirms that regulators retain authority to identify unsafe or unsound practices. But it would give banks and credit unions more statutory support to engage with digital asset markets, without treating inclusion of the technology itself as a barrier to conducting otherwise permissible activity.

The draft also creates a federal floor for state-supervised institutions providing digital asset custody or safekeeping services. This will be particularly important for state-chartered trust companies and other state-regulated custodians that have played a significant role in the market’s development.

New focus on elder fraud, scams, and consumer protection

The July 22 draft also adds substantial consumer-protection and law-enforcement provisions, including provisions focused on older adults and other vulnerable consumers. Their inclusion reflects an important political and policy reality: Any comprehensive digital asset market-structure legislation is likely to be assessed not only on its approach to innovation and regulatory clarity, but also on how it addresses fraud, cybercrime, and consumer losses.

In particular, the draft incorporates a version of the Guarding Unprotected Aging Retirees from Deception Act, or GUARD Act. The GUARD Act would permit state, local, and tribal law enforcement agencies and grantees to use certain existing federal grant funds to investigate elder financial fraud, “pig butchering” schemes, and other financial fraud. It specifically contemplates the use of funds for training, personnel, blockchain analytics tools, investigations, financial-sector liaisons, and coordination among financial institutions and law enforcement.

The focus on elder financial fraud is noteworthy, as many digital asset-related frauds involve social engineering rather than a defect in the underlying technology. Common fact patterns include romance and confidence scams, impersonation of government officials or bank personnel, fraudulent investment platforms, fake job offers, compromised accounts, and demands that victims convert funds into digital assets or send digital assets to an unfamiliar address.

The draft also would require Treasury and other federal agencies to report to Congress on financial fraud generally, extending well beyond elder-focused scams, including estimates of consumer losses, attempted and successful scams, overseas and organized-crime involvement, synthetic-identity fraud, and the effectiveness of enforcement efforts. In addition, it would authorize $600 million annually for fiscal years 2027 through 2031 for state and local programs to investigate and prosecute crimes involving digital assets, distributed ledger systems, sanctions evasion, fraud, terrorist financing, and other illicit finance activity.

Real-world implication: Exchanges, custodians, payment stablecoin issuers, wallet providers, kiosk companies, and other digital asset service providers should continue to view scam prevention, customer communications, blockchain analytics, incident-response planning, and law-enforcement coordination as central business and compliance functions. These capabilities are likely to become an increasingly visible part of regulatory expectations.

Proposing a federal response to digital asset scams and cyber-enabled theft

The revised draft would establish a Task Force for Recognizing and Averting Cryptocurrency Scams under the proposed SAFE Crypto Act. The task force would include representatives from Treasury, the Department of Justice, the Financial Crimes Enforcement Network, the U.S. Secret Service, digital asset service providers, payment stablecoin issuers, custodians, distributed ledger analytics companies, state banking authorities, and victim-support organizations.

Its mandate would include examining financial-grooming scams, Ponzi schemes, fraudulent initial coin offerings, rug pulls, money laundering, and other organized fraud. The task force would also examine consumer education, information sharing, asset recovery, and cross-border enforcement strategies. This approach recognizes that effective scam prevention requires cooperation across financial services, digital asset businesses, law enforcement, technology providers and, in many cases, communications and social media platforms.

The draft also would create a Digital Asset Cyber Innovation Center within the Treasury Department. The proposed center would coordinate with federal agencies and private-sector participants to counter cyberattacks, thefts, money laundering, sanctions evasion and related threats, with a particular focus on state actors. The center’s contemplated functions include incident response, information sharing, blockchain forensics, recovery efforts, and work on technical standards for digital asset security and compliance.

These provisions may be especially relevant to firms that operate globally or interact with high-risk wallets, ransomware proceeds, sanctioned actors, or cybercrime-related flows. The draft’s emphasis on real-time information sharing and recovery capabilities may encourage more formalized relationships among industry participants, blockchain analytics providers, and government agencies.

Digital asset kiosks could face more prescriptive requirements

The CLARITY Act draft also includes targeted federal requirements for digital asset kiosks, often referred to as cryptocurrency ATMs. The proposal would require operators to register kiosk locations and make clear transaction, pricing, and fee disclosures. It also would require scam warnings, customer acknowledgments, transaction receipts, written anti-fraud policies, compliance officers, use of distributed ledger analytics, and law enforcement contact information in required scam warnings.

For new customers, the proposal would impose heightened protections. A kiosk transaction valued at $500 or more would require confirmation that the customer wishes to proceed and is not being fraudulently induced into the transaction. In addition, a new customer’s transaction that sends assets to a particular wallet address generally could not be executed until 72 hours after initiation, during which period the customer could cancel and receive a full refund. Until Treasury adopts implementing regulations, a new customer generally could not conduct more than $3,500 in aggregate kiosk transactions in a 24-hour period.

These provisions are among the more operationally proscriptive elements of the draft. They signal that policymakers regard kiosk-related fraud as a distinct consumer-protection issue that may warrant controls beyond generally applicable money-services-business obligations.

Protecting self-custody, with an illicit-finance backstop

The draft also preserves and expands self-custody protections. The proposed Keep Your Coins Act would provide that a federal agency may not prohibit, restrict or otherwise impair the ability of certain U.S. individuals (those who obtain digital assets to purchase goods or services) to self-custody digital assets using a self-hosted wallet or other means for a lawful purpose.

Separately, the revised draft would provide that a lawfully self-custodied digital asset may not be deemed abandoned, unclaimed, or subject to forfeiture; escheat, adverse possession, finder’s title, or a similar property claim solely because of inactivity; or dormancy or a lack of indication of interest by the owner. That provision would preempt contrary state treatment of a self-custodied digital asset while preserving the application of unclaimed-property rules to assets held by custodians, exchanges, brokers, and dealers on behalf of customers.

These protections are not absolute: Instead, the draft preserves federal, state and local authority to investigate and pursue fraud, theft, money laundering, sanctions violations and other unlawful conduct. It also directs Treasury to study the risks and benefits of self-hosted wallets, including financial inclusion, privacy, cybersecurity, consumer fraud, identity verification, tax evasion, and cross-border illicit-finance risks.

Real-world implication: The revised draft seeks to treat lawful self-custody as a form of financial autonomy while preserving law-enforcement tools for demonstrably unlawful conduct. The resulting framework may be consequential for wallet developers, self-custody providers, banks, and exchanges that transact with self-hosted wallets, as well as for state unclaimed-property regimes.

Additional illicit-finance and sanctions measures

The bill would add further anti-money-laundering and sanctions provisions across the digital asset ecosystem. Among other measures, it would subject digital commodity brokers, digital commodity dealers, and certain digital commodity exchanges to Bank Secrecy Act requirements tailored to their size and complexity. Those requirements would include risk assessments, anti-money-laundering and countering-the-financing-of-terrorism programs, customer identification and due diligence, suspicious-activity monitoring and reporting, recordkeeping, and sanctions compliance.

The draft also directs Treasury to issue guidance for certain web-hosted distributed ledger messaging systems owned or operated by U.S. persons. The guidance may address commercially reasonable distributed ledger analytics, screening for sanctioned wallet addresses, transaction restrictions, and risk-based measures to address sanctions, ransomware, and other illicit-finance indicators.

Moreover, the draft would permit covered digital asset service providers and payment stablecoin issuers to implement temporary holds in specified circumstances, including when they reasonably believe a transaction relates to a violation or attempted violation of law or receive a qualified written request from a covered law enforcement agency. The proposal would provide qualified protection from private claims for good faith implementation of those temporary holds, subject to documentation and notification conditions.

These provisions reinforce a recurring theme of the revised draft: Greater legal clarity for digital asset activities is paired with more explicit expectations around financial-crime compliance, sanctions controls, customer protection, and operational resilience.

What to watch now

As the Senate seeks agreement on the CLARITY Act, several issues are likely to determine whether the new compromise holds:

• Stablecoin rewards: Whether banks accept the activity-based reward language, and whether digital asset businesses view the economic-equivalence test as sufficiently workable
• DeFi and developer protections: Whether the distinction between noncontrolling software activity and control over a noncentralized protocol is sufficiently clear and durable
• Ethics restrictions: Whether the new limits on officials and spouses can remain in the bill without becoming an obstacle to broader agreement
• Federal and state authority: Whether the proposed preemption provisions appropriately balance national market structure with state anti-fraud, consumer-protection, banking, and enforcement interests
• Agency capacity: Whether the CFTC, SEC, Treasury, banking agencies, and self-regulatory organizations can implement the extensive rulemaking and supervisory agenda contemplated by the bill. Notably, federal agencies missed the GENIUS Act’s one-year deadline for final implementing regulations, although roughly 10 proposed rules have been issued.

The bottom line

While the newest CLARITY Act draft seeks to find a legislative compromise for years of digital asset policy disputes, it does not resolve every interpretive issue. In fact, it arguably saves some of the hardest details for future joint rulemaking by the SEC, CFTC, Treasury, and banking agencies.

That said, the changes matter. As expected, the stablecoin-focused section reflects a middle ground between deposit-like yield and genuine activity-based rewards. The DeFi provisions seek to protect software development and self-custody without overlooking meaningful control. The new ethics division responds to a politically sensitive issue that now sits squarely within the market-structure debate.

The new consumer protection, law-enforcement, and cybersecurity provisions similarly demonstrate that the current Senate compromise does not focus only on market access and regulatory classification. It also seeks to respond to scams, elder and other consumer losses, cyber-enabled theft, sanctions evasion, and operational risks.

For the digital assets and finance sectors, the immediate task is to prepare for both outcomes: a legislative push that could move quickly before recess and the possibility that unresolved issues continue to shape negotiations. In either case, the Senate’s revised draft provides the clearest view yet of the rules that U.S. policymakers may expect digital asset market participants to meet.

Our team is following the legislative process closely, assessing the implications for clients across the full spectrum of digital asset activity, including issues the current draft does not squarely address, and planning how best to help market participants prepare for compliance with whatever framework is ultimately enacted.

Final note: Importantly, this article addresses a proposed legislative draft, not enacted law. The draft CLARITY Act remains subject to amendment, committee action, Senate consideration, House-Senate reconciliation, and implementing rulemaking.

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