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A revised version of the CLARITY Act would direct the SEC and CFTC to determine whether people or groups controlling so-called non-decentralized finance trading protocols must comply with securities, commodities and anti-money-laundering requirements, according to text posted on Senator Cynthia Lummis’ website.
The proposal turns on control rather than branding, and it arrives days before a scheduled Senate procedural vote on Sept. 15 – meaning none of this is current law yet.
What Would the Revised CLARITY Act Require of Non-decentralized DeFi?
The revised text defines a non-decentralized protocol as one whose functionality, operation or rules can be materially altered by a person or coordinated group. The definition also captures protocols whose controllers can restrict users, or whose transactions are not governed solely by transparent, pre-established code.
Under the proposal, the SEC and CFTC would develop activity-based rules covering registration, conduct, disclosure, recordkeeping and supervision for those controllers. Treasury, separately, would determine how existing Bank Secrecy Act obligations apply to affected controllers – a mechanism that could pull certain DeFi operators into AML and Treasury-defined compliance regimes without treating every DeFi participant the same way.
Two carve-outs stand out. Software and distributed-ledger systems themselves would not be required to register in their own capacity, and participation in an incident-response or security council would not, by itself, establish control. That distinction matters for the broader DeFi regulation debate, since it separates infrastructure from governance in a way prior drafts had left ambiguous. Readers tracking how this fits into the CLARITY Act’s procedural mechanics can find more detail in this breakdown of the SEC and CFTC’s expanding rulemaking role.
Crypto Backs New Revision, But Is It Enough?
Crypto Council for Innovation CEO Ji Hun Kim called the vote a “pivotal moment” for digital assets, innovation and American leadership in a statement shared with Cointelegraph.
Coinbase CEO Brian Armstrong told CNBC the CLARITY Act was “ready to get a yes vote,” adding that Coinbase’s prior must-have issues had been resolved even as ethics negotiations remained active.
Armstrong did not specify which provisions had changed, and the ethics section in the newly released text reportedly remained largely unchanged from the previous draft. Democratic Senator Ruben Gallego struck a more cautious note on Aug. 20, warning that “a fast vote gets you a fast result, but I’m not sure it’s the result you want.”
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Why Does the Control Test Matters for DeFi Regulation?
The practical significance here is structural: regulatory exposure would hinge on whether an identifiable person or a coordinated group can materially alter a protocol’s functionality, operation, or rules, restrict users, or override transparently established code. Protocols that lack such controlling actors – and the underlying software and ledger systems themselves – would fall outside the registration requirement entirely.
That is a materially different approach from blanket DeFi carve-outs floated in earlier legislative cycles. If the Senate vote fails to advance the bill, Armstrong noted that the SEC and CFTC could still pursue rulemaking and innovation exemptions using their existing authority – a fallback path worth watching regardless of Sept. 15’s outcome, as detailed in this broader look at how market-structure rules could touch decentralized networks.
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Will The CLARITY Act Survive the Senate Next Week?
The procedural vote scheduled for Sept. 15 requires 60 votes to advance, meaning Republicans will need Democratic support despite continuing disagreements over ethics restrictions, anti-money-laundering protections and stablecoin rewards. A cloture vote alone would not make the CLARITY Act law – it would simply clear the path for further Senate debate, a distinction explained further in this look at the bill’s procedural status.
For presale hunters and DeFi builders alike, the takeaway is that Washington is now drawing a control-based line rather than a blanket one. Until the vote clears – or the SEC and CFTC move independently on existing authority – the proposal remains exactly that: a proposal, not a rulebook.
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