CLARITY Act Updated to Regulate Non-Decentralized Crypto Protocols
The US Senate's CLARITY Act has been updated to include new rules for non-decentralized finance (DeFi) crypto protocols. The bill, proposed by Senator Cynthia Lummis and Republicans in the Senate, would require centrally controlled cryptocurrency algorithms to register with the Commodity Futures Trading Commission (CFTC). According to Lummis, the revised bill includes over 114 measures from the Democrats' proposal.
The updated version of the CLARITY Act defines non-decentralized protocols as those that are under direct control or agreement, relationship, or any other means of controlling functionality or governance changes. These protocols would need to register with the CFTC and comply with new rules created by the CFTC and Treasury.
The bill also addresses stablecoins, rewards, illicit finance, and cryptocurrency ethics. However, there are still disputes regarding these issues, including stablecoin rewards and President Donald Trump's cryptocurrency investments. The Democrats have proposed their own ethics provisions, which were not included in the latest draft of the CLARITY Act.
Senator Lummis is pushing for a September 15 procedural vote to move the bill forward. She argues that the US should set its own crypto regulations rather than relying on other jurisdictions like Singapore and the UAE.