The updated CLARITY Act requires US regulators to assess whether operators of non-decentralized finance protocols must adhere to securities, commodities, and anti-money laundering regulations. The bill defines such protocols as systems where rules or operations can be materially altered by specific individuals or groups, or where controllers have the power to restrict user access.
Under the proposed framework, the SEC and CFTC would create rules for registration, disclosure, and recordkeeping. The Treasury Department would determine how Bank Secrecy Act obligations apply to protocol controllers. The bill clarifies that software and distributed ledger systems themselves are exempt from registration, and participation in security councils does not constitute control.
The Senate is scheduled to hold a procedural vote on the bill on September 15. The measure requires 60 votes to move forward, necessitating bipartisan cooperation. While Coinbase CEO Brian Armstrong stated the bill is ready for a vote, disagreements regarding ethics restrictions and stablecoin yield policies persist among lawmakers.
Senator Ruben Gallego previously cautioned against a rapid vote before resolving disputes over ethics and stablecoin rewards. If the legislation fails to advance, Armstrong noted that the SEC and CFTC could potentially utilize their existing authority to pursue rulemaking and innovation exemptions independently.
