CLARITY Act Rewritten to Protect Self-Custody and Bitcoin Developers
In July 2025, House Republicans pushed three bills through Congress as part of 'Crypto Week', but two of them stalled. The GENIUS Act was signed into law in under 24 hours, creating a regulatory framework for dollar-backed stablecoins. However, the CLARITY and Anti-CBDC Surveillance State Acts were stuck in limbo until the House passed the CLARITY Act in its current form.
The bill has undergone significant changes since being introduced. The Senate Banking Committee rewrote most of it, striking out 256 pages from the original bill and replacing them with new content. This rewriting has sparked controversy over what exactly the bill does for Bitcoin.
According to Section 605, self-custody becomes a legally protected right under federal law. This provision, known as the 'Keep Your Coins Act', prevents regulators from restricting or impairing individuals' ability to self-custody for any lawful purpose. While some may dismiss this threat as 'fear mongering', recent historical precedent shows that overreach can happen.
The 2020 Treasury Secretary-directed rule targeting 'unhosted wallets' would have required exchanges to collect names and home addresses from individuals moving more than $3,000 per day into their private wallets. Although the rule ultimately lost momentum, it remained on the books for almost four years, leaving room for future regulators to revive and finalize it without new legislation.
Section 604 of the bill provides explicit immunity from money-transmitter liability for Bitcoin developers, node operators, and non-custodial wallet makers. This provision, known as the Blockchain Regulatory Certainty Act, clarifies that a 'non-controlling' developer or provider cannot be classified as a money transmitting business for doing so.
The bill also includes Section 401, which allows banks, brokerages, and institutions to treat Bitcoin like a real asset class. This provision would enable financial holding companies, national banks, state banks, and credit unions to custody digital assets, lend against them as collateral, operate nodes, provide brokerage and clearing services, and act as market makers or dealers without needing extra prior approval.
While the bill is broadly bullish for crypto, it's narrowly bullish for Bitcoin specifically. The vast majority of the bill exists to give altcoins a way out of securities law limbo, which Bitcoin does not acutely possess. However, the bill provides specific pro-Bitcoin language that's worth supporting on its own terms.