US Senate Republicans Release Updated CLARITY Act Text, Advancing Crypto Regulation

On July 22, US Senate Republicans released an updated version of the CLARITY Act, moving one of Washington’s most consequential cryptocurrency bills back toward a potential floor vote.

The updated text follows weeks of negotiations and seeks to establish a broad federal market-structure framework for digital assets in the United States.

The proposal addresses several disputes that have complicated its path through Congress, including ethics restrictions on federal officials, stablecoin rewards and the regulatory treatment of crypto developers and intermediaries.

Speaking on the legislation, Senator Cynthia Lummis said:

“I want to thank my Democratic colleagues for their important contributions to this draft, and express my commitment to reaching a deal in the coming days that will allow this legislation to become law. Consumer protection and pro-innovation policy aren't opposites — this bill proves it.”

Asset management firm Grayscale also stated that the bill would unlock the next wave of adoption for the emerging industry.

Republicans are expected to need Democratic votes to reach the 60-vote threshold required to overcome procedural hurdles in the Senate.

CLARITY Act's bans federal officials from issuing digital assets

The revised legislation would impose a new set of restrictions on the cryptocurrency activities of presidents, lawmakers and other senior federal officials, addressing a conflict-of-interest issue that has become one of the biggest obstacles to Democratic support for the CLARITY Act.

Under the proposal, the president, vice president, members of Congress, federal judges and other covered officials would be prohibited from issuing or sponsoring cryptocurrencies and other digital assets for compensation while in office. Their spouses would also fall under the restriction.

The legislation would go further by requiring covered officials to address cryptocurrency and digital-asset investments they already hold. They would have to sell affected holdings, place them in blind trusts they do not control, or use a combination of both approaches.

Crypto sales exceeding $1,000 would also have to be disclosed, adding digital-asset transactions to the financial activities subject to greater scrutiny while officials are in government.

The proposal would direct the Government Accountability Office to study whether additional gaps remain in federal ethics rules governing cryptocurrency and recommend further changes where necessary.

Enforcement would largely fall to the Justice Department, which would receive civil authority to pursue violations of the restrictions. The provisions would also extend to crypto intermediaries, allowing enforcement against exchanges that knowingly list digital assets issued or sponsored in violation of the rules.

The restrictions respond to months of pressure from Senate Democrats, who have argued that Congress should not establish new rules for the cryptocurrency industry without simultaneously addressing the ability of presidents, lawmakers and other officials to profit from businesses that could benefit from those policies.

Much of that pressure has centered on President Donald Trump and his family's growing involvement in digital assets.

Sen. Elizabeth Warren of Massachusetts, the top Democrat on the Senate Banking Committee, has repeatedly cited Trump's crypto ventures while demanding stronger conflict-of-interest provisions.

Those concerns persisted after the Banking Committee advanced CLARITY in a 15-9 vote in May. The committee version moved forward without the ethics protections Warren and several other Democrats had demanded, leaving the issue to be resolved before the legislation could attract broader support in the full Senate.

Trump's acceptance of the Republican proposal this week removes one source of uncertainty surrounding the negotiations by establishing what restrictions the White House is prepared to accept.

The language is unlikely to be final, however. Democrats have not signed off on the current wording and have already raised concerns about giving the Justice Department primary enforcement authority without providing a role for state attorneys general.

Further negotiations over the ethics section are expected as Republicans seek the Democratic votes needed to advance the broader CLARITY Act.

Developer protections survive as crime provisions expand

While lawmakers moved toward stricter rules for public officials, the revised draft also preserves protections for software developers that have generated a separate fight between crypto advocates and some law-enforcement groups.

The Blockchain Regulatory Certainty Act framework generally shields developers and infrastructure providers from being classified as money transmitters solely because they write software or maintain decentralized networks, provided they do not control users' assets.

The protection has become an important issue for DeFi developers, who argue that writing software without taking custody of customer money should not trigger the same regulatory obligations imposed on financial intermediaries.

The draft maintains a limit on that protection for people who knowingly facilitate illegal transactions, preserving a route for prosecutors to pursue criminal conduct rather than extending a blanket exemption to activity involving decentralized technology.

Republicans have paired those protections with a new package aimed at answering law-enforcement concerns about crypto crime.

The draft would provide additional resources for state and local investigations involving digital assets and expand access to blockchain-analysis tools.

It would also establish training programs for investigators and prosecutors and create a cyber-focused center to address threats connected to foreign actors, including North Korea and Iran.

A public-private task force would coordinate government and industry responses to cryptocurrency fraud, while stablecoin issuers would face requirements to comply with valid government orders involving actions such as freezing or seizing assets.

The changes build on an earlier Banking Committee version that already subjected digital-asset brokers, dealers and exchanges to Bank Secrecy Act requirements and contained safeguards for developers who do not control customer funds.

The combination reflects one of the central balancing acts in the Senate negotiations: preserving peer-to-peer software development while ensuring that those protections do not block investigations of money laundering, sanctions evasion and other crimes.

Stablecoin compromise avoids another reopening

Another dispute that threatened CLARITY earlier this year remains largely settled in the new draft, reducing the number of issues negotiators would have to renegotiate before a floor vote.

The stablecoin section keeps the compromise negotiated by Republican Sen. Thom Tillis of North Carolina and Democratic Sen. Angela Alsobrooks of Maryland.

Companies would be barred from paying interest merely because customers leave payment stablecoins sitting in an account. Rewards connected to qualifying activity, including transactions and certain other uses of the tokens, could continue as long as they do not function like interest paid on a traditional bank deposit.

The distinction emerged after banks warned that allowing stablecoin providers to offer deposit-like yields could pull money away from insured bank accounts, while crypto companies argued that a broad prohibition could eliminate loyalty programs and other activity-based incentives.

Meanwhile, the updated legislation also retains bankruptcy protections intended to clarify what happens to customers' digital assets when an exchange or custodian fails.

Customer assets covered by the protections would remain customer property rather than automatically becoming part of the bankrupt company's estate available to creditors. The distinction became a major issue after failures including Celsius and FTX exposed how differently customer claims could be treated depending on custody arrangements and contractual terms.

Those provisions address asset ownership and creditor treatment during insolvency, rather than preventing the fraud, liquidity problems, or management failures that can cause a crypto company to collapse.

What’s next for the CLARITY Act?

The revised text now moves the CLARITY Act into another round of negotiations, with lawmakers still needing to resolve disagreements over ethics and other provisions before Senate leaders can assess whether there is enough support for a floor vote.

The calendar adds pressure to those talks. The Senate is scheduled to begin its August state work period on Aug. 10, leaving less than three weeks for negotiators to settle outstanding issues, complete the necessary procedural steps and secure floor time.

No Senate vote on CLARITY had been scheduled as of press time.

Even if the bill clears the Senate, it would still face another legislative hurdle before reaching the White House.

The Senate has substantially revised the version passed by the House, meaning both chambers would need to reconcile their differences and approve identical language before the legislation could be sent to President Trump.