CLARITY Act Revisions Target Controlled DeFi Protocols Ahead of Senate Vote
A revised version of the Digital Asset Market CLARITY Act has been released by Senate Banking Digital Assets Subcommittee Chair Cynthia Lummis, just days before a crucial September 15 Senate vote. The updated bill includes significant changes covering decentralized finance, prediction markets, and digital-asset regulation.
The new provisions target protocols that claim to be decentralized but remain under identifiable control, requiring them to register with the Commodity Futures Trading Commission and comply with Bank Secrecy Act requirements. At the same time, the draft contains protections for genuinely decentralized infrastructure, exempting activities such as providing interfaces to access data or administering decentralized governance systems.
The bill's DeFi provisions have been narrowed to apply only to spot and cash digital commodity transactions, addressing concerns over how the legislation could affect prediction markets. This distinction is crucial for platforms operating event-contract and prediction markets, reducing the risk that broad DeFi language inadvertently rewrites rules governing those products.
Despite these changes, the CLARITY Act still faces resistance from lawmakers and banks. The crypto industry has mounted competing lobbying campaigns with banking groups, while Democrats have raised concerns about anti-money-laundering and ethics safeguards. Some Republicans and community banks remain worried that crypto products will compete with traditional deposits.