Lummis says Clarity Act text carries over 100 Democrat-requested changes

Senator Cynthia Lummis said the updated Clarity Act text includes more than 100 changes requested by Democrats. Senate Republicans released a 630-page version that is 14 pages longer than the July 22 draft. The September draft differs from the July draft in 14 of 103 sections. Those sections contain 104 discrete edits. The DeFi safe harbor in Section 20209 grew from 285 words to about 2,200 words. The provision gives validators a full carve-out from the Commodity Exchange Act. It gives node operators the same protection. It also covers people who publish wallet software. Front-ends receive protection only from spot-market rules. Governance systems receive protection only from spot-market rules. Liquidity pools receive protection only from spot-market rules. Wallet-software upkeep receives protection only from spot-market rules. The CFTC must write compliance rules for controllers of protocols that are decentralized in name only. That mandate does not automatically trigger registration. The code itself is not required to register. Treasury must write matching anti-money-laundering rules for entities the CFTC brings under the framework. State securities law would no longer apply to the covered activities. State commodities law would no longer apply to the covered activities. State digital-asset law would no longer apply to the covered activities. The preemption provision would also apply to conduct before enactment. State fraud powers would remain in effect. State manipulation powers would remain in effect. State anti-money-laundering powers would remain in effect. Division C, the ethics title, is unchanged. Section 10404 still bars yield on payment stablecoins. Section 10604 still contains the developer protections known as the Blockchain Regulatory Certainty Act. The American Bankers Association and 60 other banking groups asked Senate leaders to tighten the rewards rules. The groups warned that the rules could cause deposit flight from community banks. Republican Senators Josh Hawley and Jerry Moran have raised concerns about the rules. Democrats have tied their support to stronger ethics terms covering President Donald Trump's crypto holdings. The bill gives credit unions a clearer footing through definitions from the GENIUS Act. The text does not expand their authority into brokerage or dealing. CFTC spot oversight would cover every payment stablecoin. The July version covered only payment stablecoins from licensed issuers. The bill would cover transactions on or through an entity registered with the Commission. States would retain fraud-enforcement powers against registrants under Section 20207. Senators will vote Tuesday afternoon on whether to invoke cloture on the motion to proceed. The vote requires 60 votes.