Revised CLARITY Act Takes Aim at Non-Decentralized DeFi Operators

The United States government has introduced a revised version of the CLARITY Act, which aims to regulate 'non-decentralized' DeFi operators. The bill requires regulators to determine whether individuals or groups controlling such protocols must comply with securities, commodities, and anti-money laundering (AML) requirements.

The revised text defines non-decentralized finance trading protocols as those whose functionality, operation, or rules can be materially altered by a person or coordinated group. This includes protocols whose controllers can restrict users or whose transactions are not governed solely by transparent, pre-established code.

The bill specifies that software and distributed ledger systems would not be required to register in their own capacity. It also clarifies that participation in an incident-response or security council would not establish control over a protocol.

Crypto industry leaders have backed the bill, with Crypto Council for Innovation CEO Ji Hun Kim calling it a 'pivotal moment' for digital assets and American leadership. Coinbase CEO Brian Armstrong has also expressed support, stating that the must-have issues previously raised by Coinbase had been resolved.