Revised Clarity Act splits crypto industry ahead of Senate vote

The crypto industry is currently divided over the revised draft of the Digital Asset Market Clarity Act, commonly known as the Clarity Act. 

The draft was released on Sunday night ahead of a Senate cloture vote that is scheduled for Tuesday, September 15.

It has also drawn formal opposition from a bipartisan group of 18 state attorneys general who warn that it could shield scammers.

The last-minute rewrite was aimed at securing the 60 votes needed to advance the bill.

Two of the most contested pieces of the legislation, the criminal-liability shield for software developers and the treatment of stablecoin rewards, have been reworked.

However, neither of the changes has proved to be enough to set everyone at rest.

What developers kept, and what they lost

The clearest flashpoint is the Blockchain Regulatory Certainty Act, or BRCA, which the Clarity Act would fold in.

Jason Somensatto, who is the head of policy at advocacy group Coin Center, wrote that the new Section 10604(c) still spares a “non-controlling blockchain developer or provider” from being classified as a money transmitting business under Title 31, a FinCEN-regulated money transmitter, or a financial institution.

Somensatto wrote that this would codify the control-based test FinCEN laid out in its 2019 guidance and guard against future regulatory overreach.

The new draft strips out the explicit protection against criminal liability that is found under 18 U.S.C. 1960, which is the statute covering unlicensed money transmission.

Alex Thorn, head of firmwide research at Galaxy, noted this on X, writing “all refs to 18 USC 1960 are GONE” from the new text.

Somensatto called the removal “deeply disappointing,” pointing out that the developers of Tornado Cash and Samourai Wallet were charged under that statute.

Michael Lewellen, blockchain expert and research fellow at Coin Center, is separately suing the Department of Justice (DOJ) for a declarative ruling that will confirm that writing and maintaining non-custodial software is not a crime.

Somensatto says that the case now matters even more.

‘Disappointing’ against ‘smart compromise’

Somensatto is not the only one left disappointed, as Journalist Eleanor Terrett reported that “disappointing” was the common refrain among industry figures she spoke to who would not go on the record about the BRCA changes.

However, there are voices that support the revisions, and one of them is Attorney Gabriel Shapiro, who wrote that the odds of Tuesday’s cloture vote passing were “looking good.” According to him, the circuit breaker on stablecoin rewards, used in place of an outright ban, is a “smart compromise.”

The bill also has backing at the top of the Treasury. Secretary Scott Bessent posted that the Clarity Act is “essential” to the United States winning the global technology race, tying it to the earlier passage of the GENIUS Act for stablecoins.

The stablecoin language still has critics. Christopher Williston, who leads the Independent Bankers Association of Texas, dismissed the revised yield text published Monday as “a joke” and “a meaningless nothing.”

State prosecutors warn of a scam loophole

New York Attorney General Letitia James led a bipartisan coalition of 18 attorneys general in a letter to Senate Banking Committee Chair Tim Scott and Ranking Member Elizabeth Warren, urging a no vote on the bill as written.

Their concern is federal preemption. The letter argues that the Clarity Act’s “qualified transaction” definition would let the SEC override state registration authority, weakening what the attorneys general call the first line of defense against fraud.

They cited an FBI figure of $11.4 billion stolen through crypto last year, up 22% from the prior year, with an average reported loss of $62,604. James said that states have brought more than 330 anti-fraud enforcement actions in the sector since 2017.

The coalition crosses party lines, with Republicans Kris Kobach of Kansas and Andy Wilson of Ohio signing alongside James and California’s Rob Bonta.

Prediction markets and ethics still contested

Two other fights carried into the vote. The Indian Gaming Association objected to language carving prediction markets out of the DeFi exemption.

Chair David Z. Bean said in a Monday statement that the changes “do not address the concerns of Indian Country,” and the group warned of the largest expansion of CFTC authority since the 2010 Dodd-Frank law.

Senator Cynthia Lummis, a lead sponsor, countered that Bean did not express opposition when she met in June.

On ethics, Thorn noted the bill’s sunset clause was deleted, making the ban permanent, broader, and enforceable by state attorneys general. That followed a report that President Donald Trump agreed to stricter ethics rules to keep the bill alive.

Senator Chris Van Hollen remained unconvinced, writing that the text contains “loopholes” that “enable Trump’s crypto corruption.” Senator Bernie Moreno fired back that Van Hollen had not attended a single meeting on the legislation in 18 months and that the bill carries strict ethics provisions.