Revised CLARITY Act targets “non-decentralized” DeFi operators

A revised CLARITY Act would direct U.S. regulators to determine whether people or groups controlling “non-decentralized finance trading protocols” must follow securities, commodities, and anti-money laundering (AML) rules.

The updated ethics language remained largely unchanged as the bill heads toward a procedural Senate vote scheduled for Sept. 15.

What counts as a “non-decentralized” DeFi protocol

The revision defines a “non-decentralized finance trading protocol” as one where functionality, operation, or rules can be materially altered by a person or coordinated group.

It also covers protocols where controllers can restrict users, or where transactions are not governed solely by transparent, pre-established code.

Regulator roles and new rulemaking framework

Under the proposal, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) would create activity-based rules covering registration, conduct, disclosure, recordkeeping, and supervision.

The Treasury would set out how existing Bank Secrecy Act obligations apply to affected controllers.

Exemptions for software and security participation

The bill specifies that software and distributed ledger systems would not be required to register on their own capacity.

It also states that participation in an incident-response or security council would not, by itself, establish control over a protocol.

Senate timing and remaining ethics dispute

The revised text was released ahead of a procedural Senate vote scheduled for Sept. 15. The measure requires 60 votes to advance, meaning Republicans would need support from Democrats despite ongoing disagreements over ethics, AML protections, and stablecoin rewards.

Crypto Council for Innovation CEO Ji Hun Kim said the vote is a “pivotal moment” and argued for a framework combining consumer protections with business conduct standards.

Coinbase CEO Brian Armstrong told CNBC the CLARITY Act was “ready to get a yes vote,” saying Coinbase’s previously raised issues had been resolved, while ethics negotiations were still active.

Why it matters

The revision narrows the focus to DeFi arrangements deemed controllable by people or coordinated groups, which would bring more protocol operators into the SEC, CFTC, and Treasury compliance framework if the bill advances.