Senate Republicans have released an updated draft of the long-awaited Crypto Clarity Act just days before a scheduled floor vote. The revised legislation introduces specific amendments requiring non-decentralized DeFi protocols to register with the CFTC and clarifies that federal credit unions may utilize digital assets or distributed ledger systems for authorized activities. A protocol is deemed decentralized only if it operates solely on transparent encoded rules without external control or censorship capabilities.
The bill aims to establish a regulatory framework dividing oversight among agencies by distinguishing digital assets as securities, commodities, or stablecoins. Although the House passed an earlier version in July, progress stalled due to conflicts between banking lobbies and crypto firms regarding stablecoin yield payments. President Donald Trump has urged lawmakers to pass the legislation to maintain U.S. leadership in Bitcoin and crypto, while some Democrats continue to demand further amendments.
This development signals a critical juncture for U.S. crypto regulation, moving from legislative debate to imminent voting action. By explicitly defining decentralization tests and granting credit unions access to distributed ledgers, the updated draft attempts to resolve technical ambiguities that previously hindered bipartisan support. The inclusion of CFTC registration requirements for non-decentralized DeFi protocols represents a concrete step toward integrating emerging financial infrastructure into existing regulatory frameworks.
However, the persistence of Democratic objections and the recent history of lobbying clashes over stablecoin yields suggest that passage remains uncertain despite Republican momentum. The timing of the September 15 vote places significant pressure on lawmakers to finalize compromises, particularly regarding ethics provisions and market structure definitions. Observers should watch whether the final text retains the strict decentralization criteria, as these definitions will fundamentally shape how institutional players approach compliance and custody solutions in the coming years.
