- Senate Democrats said the revised CLARITY Act still lacks stronger ethics, consumer protection, and enforcement measures.
- The draft keeps self-custody protections, BRCA provisions, and stablecoin rules that prohibit interest on idle balances.
- New provisions expand crypto crime enforcement, bankruptcy protections, and compliance rules for stablecoin issuers.
Senate Democrats have raised new objections to the updated CLARITY Act, complicating the bill’s path to the 60 votes needed for passage. According to journalist Eleanor Terrett, Republican senators released revised legislative text after stakeholder briefings, while Democratic senators said several sections still require stronger protections. The statement came after Republicans shared the latest draft, although no date was specified.
Democrats Target Ethics And Enforcement
According to Eleanor Terrett, Senators Angela Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper, Mark Warner, and Raphael Warnock opposed the current proposal.
The senators said ethics, consumer protection, illicit finance, conflicts of interest, and market integrity provisions remain insufficient. They added that negotiations with Republican lawmakers have continued for the past year. However, they said more work remains before the legislation reaches the Senate floor.
Meanwhile, Terrett reported that the updated ethics package resulted from negotiations between the White House, Senator Cynthia Lummis, and Senator Bernie Moreno. Democrats have not approved that section.
The proposal would ban the president, vice president, members of Congress, federal judges, and other covered officials from issuing sponsored digital assets for compensation until January 20, 2029. It also requires covered officials to sell crypto holdings, place them in blind trusts, or do both.
Additionally, the proposal gives the Department of Justice civil enforcement authority over ethics violations. However, Democrats oppose excluding state attorneys general from that enforcement process, according to Terrett.
BRCA And Stablecoin Rules Remain Unchanged
Several major sections remained unchanged from the version approved by the Senate Banking Committee in May. According to Terrett, the Blockchain Regulatory Certainty Act still protects non-custodial software developers and blockchain infrastructure providers from money transmitter classification.
The Lummis-Grassley amendment also remains. It preserves federal criminal liability for anyone who knowingly facilitates illicit transactions. Meanwhile, the Keep Your Coins Act continues protecting individual self-custody rights.
The stablecoin yield language also remains unchanged. Companies cannot pay interest on idle payment stablecoin balances. However, they may offer activity-based rewards that are not equivalent to bank deposit interest.
Law Enforcement And Bankruptcy Protections Expanded
The revised bill also introduces a dedicated law enforcement section. It increases funding for state and local crypto investigations and blockchain analytics tools. Additionally, it creates new training programs for investigators and prosecutors.
It also establishes a cyber center targeting threats from nation-state actors, including North Korea and Iran. Furthermore, the bill creates a public-private task force to combat crypto fraud. Stablecoin issuers must also comply with lawful orders involving token freezes, seizures, burns, and reissuance.
Finally, the legislation outlines bankruptcy protections for customer digital assets. According to Terrett, those assets would remain customer property instead of becoming part of a bankrupt company’s estate.
