- President Trump has reportedly agreed to the revisions in the CLARITY Act to ensure its smooth passage as it heads to a cloture vote.
- The White House has accommodated 80% of the proposed language in the bill’s ethics provisions.
All eyes are on the prize as the Digital Asset Market CLARITY Act heads to a cloture vote at 2:15 PM ET on Tuesday in the US Senate. In preparation for the event, Republican senators released an updated version of the bill on Thursday that addresses their Democratic Party counterparts’ earlier gripe.
The new proposed language has reportedly reached US President Donald Trump’s desk, and he has already given them the go-signal.
Republicans called the revision their “last, best and final” offer to Democrats amid the narrow window for the legislation’s passage as another recess looms to pave the way for the midterm elections.
According to Crypto in America’s Eleanor Terrett, the changes accommodate the Democratic Party’s concerns about the bill’s ethics, open-source developers’ safe harbor, stablecoin yields, and vertical integration provisions.
Expanded Ethics Provisions
The Democrats’ key contention revolves around the CLARITY Act’s ethics provisions. It follows Trump and his family’s continuous profiteering in crypto-related activities, which they argued was rife with conflicts of interest.
The source claimed that Trump has agreed to incorporate 80% of the ethics proposal of Senators Thom Tillis and Ruben Gallego. The new text bars elected federal officials and judges from issuing or sponsoring digital assets. Additionally, it requires them to either divest “substantial” crypto-related financial interests or place them in a blind trust.
Interestingly, the administration has caved in to the Democrats’ push to allow state attorneys general to enforce the CLARITY Act’s ethics provisions. Earlier, the bill authorized the Department of Justice (DOJ) to have exclusive jurisdiction over the matter.
Narrowed Down Safe Harbors for Software Developers
The parties have also agreed to limit the legal protections offered by Section 604 of the bill to open-source software developers, otherwise known as the Blockchain Regulatory Certainty Act (BRCA). Initially, it established a strong safe harbor for decentralized, non-custodial blockchain developers, preventing their prosecution for simply writing code. Supporters like Senator Ron Wyden said such safeguards are important to ensure continued innovation in the digital asset space.
The revision limits the BRCA protections to the Bank Secrecy Act and civil enforcement. It no longer shields software developers from criminal cases, effectively removing their immunity from prosecution under Section 1960 of the US Code prohibiting unlicensed money transmitting businesses.
Circuit Breaker on Stablecoin Yields
Addressing the banking industry’s concerns over possible deposit flight if any form of yields in crypto and stablecoins will be permitted in the CLARITY Act, lawmakers have concurred on the addition of a “circuit breaker” backstop in its language. The measure authorizes federal regulators to intervene if there is proof of a widespread deposit flight from community banks to stablecoins.
The new rules assign the Treasury Department as arbiter in such a scenario.
Guardrails in Vertical Integration
The revisions provide guardrails around the vertical integration of digital assets, including affiliate trading. They likewise aim to prevent conflicts of interest involving digital commodity exchanges, brokers, and dealers.
Furthermore, the changes ensure the strict implementation of state consumer protection laws. These do not exempt developers from prosecution under derivatives laws or impact prediction markets.
