Melker Bengtsson
TL;DR
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Senate Republicans presented an updated CLARITY Act four days before the cloture vote, with the main changes touching the DeFi sections
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The ethics provision remains unchanged, and the 60-vote cloture is the Democrats' last major point of leverage
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Hours after the draft landed, 77 state bankers associations and two national ones sent a letter opposing the stablecoin rewards
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The associations are lobbying for debate and amendments to the bill, not seeking to kill it entirely
Yesterday, Senate Republicans presented an updated version of the CLARITY Act. The digital asset market structure bill has only four days to go before the Senate is set to vote on cloture and progress has seemed stalled since the last draft was published. Now, it looks like we’re finally seeing some movement.
Because, just hours after the new draft landed, all 77 state bankers associations and two national ones sent a letter opposing the stablecoin rewards. Again.
Republican Senators have spent the summer urging Democrats to pass the bill. They’re saying that if it doesn’t pass now, it may not be this decade. And that would be terrible for the US position as leaders in crypto. However, it has seemed as if a compromise was far away, that Republicans were dug in on the ethics provision.
Over 100 changes to accommodate Democra
In a post on X, Senator Cynthia Lummis, Wyoming Republican and the bill's chief crypto negotiator, said the new draft reflects bipartisan work over August.
This updated Clarity Act text reflects bipartisan hard work over August—specifying when decentralized-in-name-only DeFi protocols must register with the CFTC and limiting the DeFi provisions to spot and cash transactions, in response to Native American concerns about prediction…
— Senator Cynthia Lummis (@SenLummis) September 10, 2026
The main changes touch the DeFi sections of the draft. Both when DeFi projects need to register with the CFTC and comply with US anti-money-laundering reporting rules, as well as explicitly excluding prediction markets.
The Democrats' last major point of leverage
On Tuesday, the cloture vote takes place. 60 votes are needed to pass, to move on to debate. That means Democratic senators are required to cross the aisle. And, while the new draft accommodates the Democrats, the previous sticking point, the ethics provision, remains unchanged.
Both the previous and current draft leave the power to prosecute a breach of the ethics provision with the US Attorney General. Democrats feel that a White House appointed official will not fulfill those duties. Republicans, meanwhile, fear that giving that power to state attorneys general will leave the President open to frivolous suits. Both sides have a point.
Senator Thom Tillis, Republican from North Carolina, said that the White House still has to engage on the ethics provision. The administration themselves are encouraging the Senate to pass cloture so that debate can begin. The problem is that while cloture, the process to move the bill to debate, needs 60 votes, final passage of the bill only requires a simple majority. This is the Democrats’ last major point of leverage.
Prediction market Polymarket’s odds of passage this year have been going down steadily this year. And the new draft drew the odds down even further. From 82% in February to 15% after the new draft. Investors did not like that the ethics provision was left untouched.
Banking associations back into the debate
However, movement on the bill has got the state banking associations back into the debate. Just hours after the new draft was presented, 77 state banking associations and two national ones sent a letter opposing the stablecoin rewards sections of the bill. This is not new. Community banks have always been against the stablecoin rewards. The reason it comes up now is because these associations are lobbying for the debate and amendments to the bill.
The section has not been changed since the July draft. At that point, neither side was happy with it, which is why it was considered a fair compromise. But bank associations never accepted it. They think that without changes, stablecoins will become deposit substitutes. That would hurt community banks, and in turn mortgages, small businesses and agricultural lending. The joint letter from the 77 associations said:
Congress's longstanding and clearly stated intent is that payment stablecoins serve as transactional tools rather than store-of-value products. However, in its current form, Section 10404 does not provide sufficient clarity and certainty to distinguish payment stablecoins from 'store-of-value' products and substitutes for bank deposits. Without amendment, this ambiguity could result in a flight of deposits to stablecoins with real-world consequences. Communities cannot afford that risk.
Their letter suggested specific amendments to the bill and did not seek to kill it entirely.
It remains to be seen whether the White House chooses to engage on the ethics provision. Negotiations are continuing in Washington D.C.
With the letter from the banks associations, we also got a taste of what awaits once the bill passes. The last word is not said on the CLARITY Act.
