New CLARITY Act Draft Targets DeFi Controllers

Senate Republicans are circulating a revised version of the CLARITY Act just ahead of a critical September 15 cloture vote. The update changes how the government views DeFi by drawing a clear line between neutral code and protocols controlled by identifiable groups or individuals. Under this plan, software itself does not need to register with regulators. Instead, the SEC and CFTC would create rules for the people or organizations that have the power to change how a protocol functions.

This shift is a major adjustment for the industry. By focusing on controllers rather than the code itself, the bill aims to preserve basic infrastructure while holding human operators accountable for things like recordkeeping and conduct. The Treasury would also step in to apply existing anti money laundering rules to these controllers. To ensure safety, the proposal includes a specific carve out for security councils, meaning participation in incident response will not automatically trigger new registration requirements.

Despite these updates, the path to passing the bill remains rocky. The September 15 vote will determine if the Senate proceeds to formal debate, but success requires bipartisan support that is not yet guaranteed. Key disagreements over ethics rules, stablecoin rewards, and money laundering protections continue to stall negotiations. Some industry leaders argue the bill is ready for a vote, while others warn that rushing the process could ignore necessary legislative safeguards.

If the bill fails to move forward, the regulatory environment for crypto will likely remain fragmented. Industry observers note that the SEC and CFTC could still pursue their own rules through existing authority if the legislation stalls. For now, market participants are watching the Senate closely to see if the proposed changes are enough to bridge the gap between opposing political factions.