CLARITY Act Targets DEFI Protocols That Can Be Controlled

What the Revised CLARITY Act Says About DeFi

A revised version of the CLARITY Act is drawing a sharper regulatory line around decentralized finance protocols that are not, in practice, truly decentralized. The updated bill would direct U.S. regulators to determine whether people or groups controlling "non-decentralized finance trading protocols" must comply with securities, commodities, and anti-money laundering (AML) requirements.

The revised text defines such a protocol as one whose functionality, operation, or rules can be materially altered by a person or coordinated group, and also covers protocols whose controllers can restrict users or whose transactions are not governed solely by transparent, pre-established code.

The provision seeks to separate systems operating without a controlling party from platforms marketed as decentralized while retaining identifiable management or upgrade authority. Importantly, participation in an incident-response or security council would not, by itself, establish control over a protocol, a carve-out aimed at preserving emergency-response mechanisms without pulling their participants into regulatory scope.

Under the framework, the SEC and CFTC would write activity-based rules covering registration, conduct, disclosure, recordkeeping, and supervision. Treasury would then determine how existing Bank Secrecy Act obligations apply to affected controllers.

Senate Faces a Critical 60-Vote Test

Senator Cynthia Lummis said the new text reflects negotiations conducted during August and contains "over 100 changes requested by Democrats."

The Senate delayed a floor vote ahead of the August 2026 recess due to partisan disagreements over ethics rules and banking opposition, scheduling a procedural vote for September 15, 2026, a cloture vote on the motion to proceed that requires 60 votes to overcome a filibuster and allow the Senate to formally begin debating the bill.

Republicans control 53 Senate seats, so at least seven Democrats would need to join a unified GOP conference to hit the 60-vote cloture threshold. Ethics, BRCA, and stablecoin reward disputes remain unresolved before the vote. If the bill fails to secure these votes, it will essentially be dead for 2026.

CoinTelegraph: Revised CLARITY Act Sets Rules for Controlled DeFi | Latham and Watkins: US Crypto Policy Tracker | CoinDesk: Senate Opens First Stage of CLARITY Act Voting