A revised version of the CLARITY Act would create a regulatory path in the United States for certain crypto trading protocols that are not “decentralized finance” in the strict sense. The updated draft directs the SEC and CFTC to write rules for how qualifying protocol controllers should handle core obligations such as registration, market conduct, disclosures, recordkeeping, and supervision—while the Treasury outlines how existing Bank Secrecy Act (BSA) requirements apply.

The measure’s immediate momentum depends on a key procedural step in the Senate. The revised text was posted by Senator Cynthia Lummis ahead of a Senate procedure slated for Sept. 15, and advancing the bill requires 60 votes—an arithmetic that effectively forces Republicans to win at least some Democratic support despite lingering disagreements over ethics provisions, anti-money laundering protections, and stablecoin-related rewards.

Key takeaways

The revised CLARITY Act would define “non-decentralized finance trading protocols” by focusing on whether control can materially change functionality, rules, or transaction governance.
The SEC and CFTC would develop activity-based rules covering registration, conduct, disclosure, recordkeeping, and supervision, while the Treasury would address BSA applicability.
Distributed ledger software itself would not need to register solely because it powers a protocol.
Participation in an incident-response or security council would not, by itself, be treated as “control” over a protocol.
Senate action is scheduled for Sept. 15, but the bill needs 60 votes to move forward.

What the revised bill targets: “control” rather than code alone

In the new version posted on Senator Lummis’ website, a “non-decentralized finance trading protocol” is tied to the practical power to alter how a protocol operates. The text defines such protocols as those whose functionality, operation, or rules can be materially altered by a person or a coordinated group.

The definition goes beyond simple administrator roles. It also covers protocols whose controllers can restrict user access, or where transactions are not governed solely by transparent, pre-established code. In other words, the bill’s regulatory focus is on whether there is meaningful discretion or governance that can change user experience or transaction outcomes—rather than treating all on-chain activity as automatically decentralized.

How regulators would implement the framework

Under the proposal, the SEC and the CFTC would be tasked with building activity-based rules for affected controllers. The categories of obligations specified in the bill include:

Registration requirements, where applicable
Conduct standards for those operating or controlling qualifying protocols
Disclosure duties
Recordkeeping requirements
Supervision expectations

The bill also assigns a different role to the Treasury. It would establish how existing Bank Secrecy Act obligations would apply to controllers identified under the proposed definition, ensuring that anti-money laundering compliance is addressed within the broader regulatory scheme rather than left entirely to existing agency interpretations.

Limits built into the proposal: software won’t automatically register

A notable aspect of the revised draft is what it does not require. The text states that software and distributed ledger systems would not be required to register in their own capacity simply for being part of a protocol. That distinction matters for builders and operators, because it separates the underlying technology from the question of who can exercise control over protocol behavior.

The bill also includes a guardrail aimed at common operational practices. It says participation in an incident-response or security council would not, by itself, establish control over a protocol. That could be relevant for organizations that coordinate response efforts after security events without necessarily being treated as protocol controllers for regulatory purposes.

Why the vote is difficult—and what could still stall

The revised CLARITY Act arrived ahead of a procedural Senate vote scheduled for Sept. 15. According to coverage of the measure, advancing the bill requires 60 votes, meaning Republicans would still need Democratic support despite ongoing disagreements on ethics, anti-money laundering protections, and stablecoin rewards. Earlier coverage from Cointelegraph noted that these issues have been central obstacles to consensus (including on stablecoin yield and related ethics restrictions).

Industry reaction has been broadly supportive, even as some stakeholders acknowledge that key disputes are not fully settled. In a statement shared with Cointelegraph, Crypto Council for Innovation CEO Ji Hun Kim called the vote a “pivotal moment” for digital assets, innovation, and American leadership. Kim emphasized the need for a framework that balances consumer protections with standards for business conduct.

Coinbase CEO Brian Armstrong told CNBC that the CLARITY Act was “ready to get a yes vote.” He said Coinbase’s previously raised “must-have issues” have been resolved, while negotiations over ethics restrictions remained active and appeared close to a solution—though Armstrong did not specify which provisions changed.

Still, Cointelegraph reports that the ethics section in the revised text remained largely unchanged from the prior version, even though the ethics component has been one of the main points of contention in negotiations. Democratic Senator Ruben Gallego previously warned against rushing the Senate vote before lawmakers resolve disputes involving ethics and stablecoin yield, arguing that a fast vote could produce the wrong outcome.

Armstrong also suggested that if the legislation does not advance, regulators could instead pursue rulemaking and innovation exemptions using existing authority—an outcome that would likely keep uncertainty alive for protocol operators in the near term.

The open question for market participants is whether the latest changes are enough to attract the additional votes required to reach 60. If the procedural vote fails, the industry may end up relying on agency-driven rulemaking rather than a clearer statutory framework—an approach that can be slower, more uneven across regulators, and more dependent on shifting enforcement priorities.

As Sept. 15 approaches, readers should watch how lawmakers characterize the “control” definition in the ethics and stablecoin-related debates, and whether negotiators can convert statements of readiness into the specific legislative support needed to clear the procedural threshold.