Senate Banking Committee Drops 309-Page CLARITY Act Draft: What It Includes

The Senate Banking Committee released the full text of the CLARITY Act just after midnight on Tuesday, publishing a 309-page draft ahead of a committee markup vote scheduled for Thursday. The bill, if passed, would regulate the U.S. crypto industry at the federal level for the first time, covering everything from stablecoin yield rules to protections for decentralized finance developers.

What Is The CLARITY Act And Why Does It Matter?

The CLARITY Act is a broad crypto market structure bill designed to insert the U.S. digital asset industry into the regulated financial system. It draws clear lines between the Securities and Exchange Commission and the Commodity Futures Trading Commission over which agency oversees which assets, resolving a long-running regulatory grey zone that has frustrated both crypto companies and investors.

Committee Chairman Tim Scott called the bill a product of "serious, good-faith work across the committee," adding that it "puts consumers first, combats illicit finance, cracks down on criminals and foreign adversaries, and keeps the future of finance here in the United States."

The text was not expected to include major surprises. Industry insiders had already reviewed it privately over recent weeks.

What Changed On Stablecoin Yield?

One of the most contested sections of the previous draft was the question of stablecoin yield, meaning whether stablecoin issuers can pay holders a return simply for holding the token.

The new text restricts the payment of interest or yield "solely in connection with the holding of payment stablecoins" or on a stablecoin balance "in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit."

This language was negotiated by Senators Angela Alsobrooks and Thom Tillis. Coinbase CEO Brian Armstrong, who pulled the company's support for the January draft over this exact issue, said at a live event on Monday that "not everyone got everything they wanted, but they got the must-haves."

The American Bankers Association, however, pushed back. In a letter to bank executives on Sunday, ABA CEO Rob Nichols argued the current text would "unnecessarily incentivize the flight of bank deposits into payment stablecoins, putting both economic growth and financial stability at risk."

How Does The Bill Handle DeFi Developers?

The draft includes the Blockchain Regulatory Certainty Act, known as the BRCA, which protects software developers who do not control user funds from being classified as money transmitters. Being labeled a money transmitter carries significant legal and compliance obligations, so this protection matters directly to open-source developers building DeFi tools.

Law enforcement groups had raised concerns that the BRCA language creates gaps in financial crime enforcement. Senators Chuck Grassley and Cynthia Lummis reached a deal earlier on Monday to address those concerns, allowing prosecutors to pursue crypto-related money laundering while keeping developer protections intact.

The DeFi Education Fund said it is encouraged by the direction of negotiations and confirmed the BRCA is present in the bill text.

What Is Still Missing From The Draft?

The most notable absence is an ethics provision addressing conflicts of interest linked to President Donald Trump's crypto holdings. Bloomberg estimated in January that Trump has made at least $1.4 billion from crypto ventures, including memecoins tied to him and his wife and his family's stake in the DeFi project World Liberty Financial.

Senate Democrats including Elizabeth Warren, Kirsten Gillibrand, and Adam Schiff have all said they will not support the bill without a conflict-of-interest provision. Chair Scott has said the issue falls outside the Banking Committee's jurisdiction and will need to be addressed separately before a full Senate vote.

The bill still needs to be merged with a similar version passed by the Senate Agriculture Committee. It will then require 60 votes in the full Senate to advance, meaning a significant number of Democrats will need to support the final text.

White House crypto adviser Patrick Witt has said the administration is targeting a July 4 passage date, while Senator Gillibrand has predicted the first week of August as more realistic.

Conclusion

The 309-page CLARITY Act draft resolves the stablecoin yield standoff, locks in DeFi developer protections, and addresses law enforcement concerns around financial crime. The ethics provision reportedly remains the single biggest obstacle to bipartisan support, and until that is resolved, the bill's path to the president's desk remains uncertain.

Resources

1. CLARITY Act Draft

2. Report by CoinDesk: Clarity Act, in the flesh, unveiled by U.S. Senate Banking Committee before hearing

3. Report by The Block: Updated Senate Banking Committee bill tackles stablecoin rewards, DeFi but sidesteps Trump's crypto conflicts of interest