The updated CLARITY Act text would restrict crypto activity by top U.S. officials while adding new customer protections after major digital asset failures.
Senate Republicans Release Updated CLARITY Act Text
Senate Republicans released an updated version of the CLARITY Act after briefing calls with stakeholders. The latest text includes ethics language, customer asset protections, stablecoin rules, and new law enforcement measures for crypto-related crime.
The ethics package was negotiated between the White House and GOP senators Cynthia Lummis and Bernie Moreno. Democrats have not signed off on the language, leaving bipartisan talks active as the bill moves toward a possible Senate vote.
Source: X
The proposal would ban the president, vice president, members of Congress, federal judges, and other covered officials from issuing or sponsoring digital assets for compensation while in office. The restriction would also apply to spouses and would carry a sunset date of January 20, 2029.
The text would also require covered officials to sell crypto holdings, place investments in a blind trust, or use both options. The Department of Justice would receive civil enforcement authority over ethics violations, including lawsuits against exchanges that knowingly list prohibited tokens.
Lummis Links Bill to Terra Collapse
Sen. Cynthia Lummis tied the bill to customer protection concerns after Terra’s collapse. She wrote that Terra’s failure wiped out about $40 billion, while much of what remained was later absorbed by the bankruptcy process.
Lummis said the CLARITY Act draws a line between reserve-backed assets and algorithmic products. She added that the bill seeks to protect customers when a platform fails, stating that customer assets should not become creditors’ “first course.”
Source: X
The updated text includes bankruptcy protections for digital assets held by exchanges and custodians. These rules are meant to keep customer assets separate from a company’s bankruptcy estate if a platform fails.
The provision could help prevent disputes similar to those seen after FTX and other failed crypto companies. The bill would treat customer assets more like traditional financial assets and help keep ownership with customers.
Crypto Rules Cover Stablecoins and Self-Custody
The Blockchain Regulatory Certainty Act remains unchanged from the Senate Banking Committee version. The provision clarifies that non-custodial software developers and blockchain infrastructure providers are not treated as money transmitters only for building or maintaining decentralized networks.
The Lummis-Grassley amendment also remains in the text. That provision preserves federal criminal liability for anyone who “knowingly” helps unlawful transactions.
The Keep Your Coins Act also stays in the bill. That section protects the right of individuals to self-custody their own crypto assets without relying on a third-party platform.
Stablecoin yield rules also remain unchanged. Companies would be barred from paying interest on idle payment stablecoin balances, but rewards tied to activity, transactions, or staking would still be allowed if they do not function like bank deposit interest.
Law Enforcement Section Adds New Powers
The updated bill adds a section focused on crypto-related crime. It would increase funding for state and local investigations and support wider use of blockchain analytics tools.
The text also creates new training programs for law enforcement and prosecutors. It would establish a cyber center focused on threats from nation-state actors, including North Korea and Iran.
A public-private task force would coordinate responses to crypto fraud. Stablecoin issuers would also need to comply with lawful orders to freeze, seize, burn, or reissue tokens when required.
Democratic support remains uncertain because some lawmakers oppose giving enforcement authority mainly to the Department of Justice without a role for state attorneys general. Sen. Ruben Gallego previously warned, “You’re not going to have the Democratic votes,” if ethics rules remain weak.
