A revised version of the U.S. Senate’s CLARITY Act would steer regulators toward deciding when certain entities that influence “non-decentralized finance trading protocols” must follow securities, commodities, and anti-money laundering (AML) rules. The updated text, posted by Senator Cynthia Lummis, is designed to clarify how oversight would apply to protocol controllers without treating the underlying software as a regulated party on its own.
The proposal arrives ahead of a procedural Senate vote scheduled for Sept. 15. Because the bill needs 60 votes to move forward, Republicans are expected to require Democratic support—despite lingering disagreement over ethics provisions, AML protections, and elements tied to stablecoin rewards.
Key takeaways
- The revised CLARITY Act defines “non-decentralized finance trading protocols” based on whether a person or coordinated group can materially change protocol functionality, rules, or user access.
- Regulators would issue activity-based requirements: the SEC and CFTC would cover registration, conduct, disclosure, recordkeeping, and supervision, while the Treasury would address how existing Bank Secrecy Act obligations apply.
- The bill explicitly states that software and distributed ledger systems would not need to register in their own capacity.
- Participation in an incident-response or security council alone would not automatically establish “control” over a protocol.
- The measure faces procedural headwinds, requiring 60 votes to advance and setting up a fast decision window before any broader legislative momentum is lost.
What the revised CLARITY Act would change
According to the revised text posted on Senator Cynthia Lummis’ website (see posted document), the central policy move is a regulator-facing determination: identifying whether those who control certain types of trading protocols—specifically those that are not fully decentralized—should be treated as regulated actors.
The proposal’s definition is not limited to whether a protocol has governance or administrative features. Instead, it focuses on control signals that regulators could evaluate, including whether a person or coordinated group can:
- materially alter the protocol’s functionality, operation, or rules;
- restrict users; or
- operate a system where transactions are not governed solely by transparent, pre-established code.
This framing matters because it shifts the compliance question from abstract decentralization claims to measurable governance and operational power. For investors and users, the likely effect is more predictable enforcement boundaries: entities exerting meaningful influence over how protocol-based trading works would fall within a more conventional regulatory structure, while purely automated code paths would be treated differently.
How enforcement would be split across regulators
Under the bill, the SEC and CFTC would develop rules tied to specific kinds of regulated activity. The text calls for activity-based requirements spanning “registration, conduct, disclosure, recordkeeping and supervision.” In parallel, the Treasury would define how existing Bank Secrecy Act obligations apply to covered “controllers.”
That division is significant for market participants because it suggests the CLARITY Act is attempting to map responsibilities to existing U.S. agencies rather than create an entirely new regulatory body. For firms operating across spot trading, derivatives, or cross-border custody and compliance stacks, agency-by-agency guidance will likely be as consequential as the bill’s core definition.
The proposal also includes clarifications meant to reduce overreach. It states that software and distributed ledger systems would not be required to register “in their own capacity.” It further specifies that participating in an incident-response or security council would not, by itself, establish control over a protocol.
These details could be particularly important for developers, security teams, and operational incident coordinators, who otherwise might be concerned that routine cybersecurity and oversight activities could be construed as governance control.
Industry reaction: support for a framework, but ethics questions remain
Crypto Council for Innovation CEO Ji Hun Kim said the upcoming vote represents a pivotal moment for digital assets and U.S. leadership. In a statement shared with Cointelegraph, Kim argued the U.S. needs a framework that balances consumer protections with clear standards for business conduct.
Coinbase CEO Brian Armstrong, speaking to CNBC, said the CLARITY Act was “ready to get a yes vote.” Armstrong said the “must-have issues” Coinbase previously raised have been resolved, while negotiations over ethics restrictions were still underway and appeared close to a solution. He did not specify which provisions had changed.
Even with that optimism, Cointelegraph previously reported that the ethics section has been one of the main negotiation sticking points. The newly released text appears to preserve that section largely unchanged from an earlier version, leaving open whether the ethics dispute has truly moved from disagreement to compromise.
Democratic Senator Ruben Gallego had earlier warned against rushing ahead before lawmakers resolved issues tied to ethics and stablecoin yield, arguing that a quick vote might not produce the right result. That context helps explain why—despite broad industry interest in a clearer regulatory path—the bill may still be hard to advance without additional support.
Procedural math and what happens if the bill stalls
Earlier coverage from Cointelegraph noted that the CLARITY Act requires 60 votes to advance. With the procedural Senate vote scheduled for Sept. 15, the updated bill must clear a high threshold—meaning Republicans will still need votes from Democrats despite ongoing disagreement.
Armstrong suggested that if the legislation does not move forward, regulators could pursue alternative paths using existing authority—such as rulemaking and innovation exemptions involving the SEC and CFTC. For market participants, that matters because it frames the choice not only as “bill versus no bill,” but as “clear statutory framework versus incremental regulatory action.”
In practical terms, firms planning compliance roadmaps may be forced to decide whether to treat the CLARITY Act as an achievable near-term signal—or as a politically stalled project that could be overtaken by agency initiatives. Either way, the bill’s definitions and regulator split would likely still influence how companies describe decentralization, governance participation, and operational control, even if the statute itself fails to advance.
Readers should watch closely for whether negotiators can resolve the remaining ethics-related disagreement by the procedural vote—and, if the bill fails to clear that threshold, what specific SEC and CFTC rulemaking efforts or exemption approaches regulators choose next.
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