Clarity Act revision adds CFTC rules for non-decentralized DeFi protocols ahead of Sept. 15 vote

Senate Republicans have released a revised 630-page draft of the Clarity Act just five days before a scheduled September 15 procedural vote, adding new federal registration requirements for crypto trading protocols that fail the bill’s decentralization standard.

The revised text, unveiled on September 10, creates a new regulatory category called a “non-decentralized finance trading protocol.” The term applies to individuals or coordinated groups that hold direct or indirect authority to control or materially change a protocol’s functions, operations, or consensus rules. Protocols covered by the definition would be required to register with the Commodity Futures Trading Commission, with the CFTC and the Treasury Department directed to develop the implementing rules that determine how the standard applies across different technical and governance arrangements.

## A new framework for controlled protocols

The provision is designed to separate genuinely permissionless systems from platforms marketed as decentralized while retaining identifiable management or upgrade authority. That distinction has sat at the center of the Senate debate over DeFi regulation for months, with lawmakers split on whether software developers, interface operators, and governance participants should face financial compliance duties when they never take custody of customer assets.

The latest text limits its DeFi provisions to spot and cash digital commodity transactions. Senator Cynthia Lummis of Wyoming said the clarification responds to concerns raised by tribal governments about whether the legislation could sweep in prediction markets, which may involve separate federal and state legal questions. Credit unions also received further clarification on permissible digital asset activity, according to her statement, although public summaries released Thursday did not identify every provision changed in the full 630-page draft.

Lummis, who chairs the Senate Banking subcommittee that shaped the bill, said Republicans incorporated more than 114 provisions requested by Democratic senators during negotiations. She described the new version as a bipartisan product and urged colleagues to support “the bill they built.” However, no Democratic senator had publicly endorsed the revised text at the time of its release.

## Ethics language remains the key barrier

The revision retains the bill’s ethics provision, which restricts public officials, government employees, and their spouses from issuing or sponsoring digital assets. Enforcement authority would remain primarily with the Justice Department, and the restriction would expire in January 2029.

President Donald Trump accepted the provision in July, but Democratic lawmakers have repeatedly called it inadequate. Their objections center on the narrow scope of covered activity, the limited enforcement mechanism, and the sunset date. Trump and members of his family maintain financial connections to World Liberty Financial and the TRUMP memecoin, and critics argue that legislation regulating crypto markets should contain stronger restrictions on digital asset interests held by senior federal officials.

A separate ethics proposal developed by Democratic senators alongside Republican Senator Thom Tillis sought stronger terms, but the September 10 revision did not adopt its major elements, according to a report from Politico. With no public Democratic commitments secured, Republicans remain short of the 60 votes needed to open floor debate if the chamber divides along party lines.

## Stablecoin rewards and deposit competition

Banking groups and crypto companies also remain at odds over stablecoin rewards. Banks contend that rewards paid on stablecoin balances could encourage customers to move money out of insured accounts, shrinking the deposit base that supports lending. Crypto companies counter that transaction-based incentives differ fundamentally from interest paid on bank deposits.

Earlier Senate language prohibited payments based solely on holding a stablecoin while permitting rewards tied to payments, loyalty programs, and other qualifying activity. The disagreement has triggered lobbying campaigns in senators’ home states. Reuters reported that the Independent Community Bankers of America arranged meetings between local bankers and senators during the August recess, while Stand With Crypto, an advocacy group backed by Coinbase, said its supporters contacted members of Congress nearly 50,000 times during August.

Some Republicans share the concerns. Senators James Lankford and Mike Rounds have questioned whether the bill could allow certain digital tokens to compete with traditional bank deposits, Reuters reported. Democrats have separately cited money laundering controls, consumer protection, and market integrity.

## What the September 15 vote actually decides

Senate Majority Leader John Thune scheduled the procedural vote for September 15, one day after senators return to Washington. The vote requires 60 senators to support moving the Clarity Act into floor consideration. It is not a final vote on passage. A successful vote would open the bill to formal debate and amendments, and senators could seek changes to the ethics provision, the stablecoin reward rules, the new DeFi requirements, or the allocation of authority between the Securities and Exchange Commission and the CFTC.

The legislation would create federal classifications for digital assets and divide oversight between the two market regulators. The CFTC would receive authority over spot markets for assets classified as digital commodities, while the SEC would retain jurisdiction over securities offerings. The House previously passed its version of the Clarity Act with support from both parties, and any Senate changes would require the two chambers to approve identical text before the bill could reach the president’s desk.

Lummis argued the bill would give the digital asset industry a durable statutory structure that could not be rewritten as easily as agency rules after a change in administration. For now, that argument has yet to translate into the bipartisan votes the bill needs to survive its first procedural test.

The regulatory uncertainty continues to weigh on markets. Bitcoin traded near 77,900 USD on September 11, with Ethereum around 2,530 USD and Solana near 102 USD, as traders watched the September 15 vote and upcoming inflation data for direction.