Senate to Vote on Updated CLARITY Act Text

Senate Republicans and the White House released new text for the CLARITY Act on Sunday night. The document arrives 40 hours before a scheduled vote in the Senate. The bill was drafted by the crypto industry. It faces significant opposition from financial reform groups.

Critics describe the late arrival as an attempt to obscure major flaws. They argue the revisions do not fix core structural risks. The American for Financial Reform warns against passing the legislation. They urge senators to block the bill.

Stablecoin incentives threaten community banks

The GENIUS Act prohibits stablecoin issuers from paying interest. It does not stop crypto platforms from offering similar rewards. These incentives aim to attract deposits from community banks. This shift could reduce credit for small businesses and farmers.

The new CLARITY Act text grants the Treasury Department circuit-breaker authority. This power allows rules to restrict stablecoin yields after deposit flight occurs. Critics call this a reactive measure. They note that data on bank deposits lags behind market changes. The proposal lacks proactive tools to prevent capital migration.

DeFi exemptions remain largely intact

Previous versions of the bill exempted decentralized finance operators from oversight. This exemption allowed avoidance of anti-money laundering rules. The new text slightly shortens the list of exempt actors. It leaves the broader regulatory gap untouched. The framework still poses risks for sanctions evasion.

The revision removes language that exempted some DeFi actors from criminal liability. It retains other loopholes for crypto platforms. The Commodity Futures Trading Commission will create registration requirements for non-DeFi platforms. Critics argue this provides guidance on evading oversight. The distinction between centralized and decentralized entities remains vague.

Platform conflicts of interest persist

Vertically integrated crypto platforms act as brokers and exchanges. This structure creates conflicts of interest. Customers face unfair prices and unsuitable investments. The earlier bill text failed to address these risks. The revised language adds vague provisions. These measures are described as unenforceable.

GN markets/crypto (en-US) reports that the bill still allows platforms to gouge customers. It permits interest payments that drain bank deposits. It fails to stop crypto-related corruption. The legislative process moves forward despite these concerns. Senators must decide whether to pass or block the measure.