• CLARITY Act revisions would necessitate the registration of some centrally controlled cryptocurrency protocols with the CFTC.
• The bill would modify DeFi requirements and keep ethics language while undergoing a September 15 procedural vote.

The updated version of the U.S. CLARITY Act imposes requirements on centrally controlled crypto algorithms before the September 15 vote. The proposal was introduced by Senator Cynthia Lummis and Republicans in the Senate, following discussions with Democrats. According to Lummis, the Republicans included more than 114 measures from the Democrats’ proposal in the bill.

New Bill Describes Non-Decentralized Protocols

The bill describes some protocols as “non-decentralized finance” if they are under the direct control or by agreement, relationship, or any other means of controlling functionality or governance changes in relation to the protocol. Protocols described thus shall have to register with the Commodity Futures Trading Commission.

The CFTC and Treasury will also have to create rules to implement the new registration requirement. According to a source within the crypto industry, the Democrats had asked for the provision while negotiating the new bill. The revised bill has narrowed its DeFi provisions to include only spot and cash transactions for digital commodities. Lummis says that move has sorted out the fears of the tribal governments regarding the impact on the prediction markets. The bill also includes provisions on how credit unions can engage in cryptocurrency business activities.

Stablecoins, Rewards, Illicit Finance and Ethics Obstacles

However, there is still room for dispute regarding such issues as stablecoin rewards, illicit finance, and cryptocurrency ethics. Disputes about stablecoin rewards have been discussed throughout negotiations related to the overall market structure legislation. In addition, there is an issue of ethics due to President Donald Trump’s cryptocurrency investments and interests in World Liberty Financial. Another memecoin, TRUMP, has also attracted attention to Trump’s cryptocurrency-related investments.

In July, Trump approved an ethics provision prohibiting government officials and their spouses from sponsoring or producing digital assets. This provision will be enforced by the Justice Department until January 2029. Democrats say that it does not include enough measures and offer their own ethics provisions. It seems that the latest draft of the CLARITY Act mostly keeps the same language about the issue. According to Politico, the new provision still lacks Democrats’ approval.

Lummis Advocates for September Vote

The senator keeps on pushing the bill amid the end of her tenure in the Senate. Lummis is retiring from Congress in 2027 and will not be running again for the Senate position. In her Wednesday blog, Lummis stressed that US crypto regulations should be set by Congress and not by other jurisdictions. This was especially with regard to Singapore and the UAE, which were said to have been working on cryptocurrency regulations. The September 15 procedural vote will either allow the modified bill to progress in the Senate or not.

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