.png){kind=logo}
The Senate Banking Committee released an updated CLARITY Act bill on May 12, moving a major digital asset bill into public committee review before a May 14 markup. The bill sets rules for crypto intermediaries, network tokens, market regulators, bank crypto services, DeFi protections, and stablecoin yield restrictions. Its next step remains uncertain, as Democratic concerns over ethics rules for federal officials remain unresolved.
The updated Bill shifts the Senate effort from private talks into a formal committee process. If the panel approves it, the bill would still need more negotiations before reaching the Senate floor.
The CLARITY Act would establish new rules for digital asset intermediaries and define how certain network tokens receive treatment under federal law. It would also expand the role of federal market regulators.
At the same time, the bill creates a path for banks to offer crypto-related services. That provision places traditional financial institutions inside the wider digital asset framework.
Several lawmakers believe the measure could reach President Donald Trump’s desk before July 4. Senator Thom Tillis described the updated language as a bipartisan compromise after months of talks with stakeholders.
Still, the bill faces a key political test. Democratic concerns over ethics restrictions for federal officials did not appear in the released bill.
Section 404 has become the most closely watched part of the updated bill. It targets passive yield on payment stablecoin balances held by U.S. customers. The Bill would prohibit covered digital asset service providers and their affiliates from paying passive interest or yield on those balances. This rule would apply to payment stablecoins.
That language aims to stop crypto platforms from offering products that resemble bank deposits. It also seeks to prevent firms from doing so without bank-style regulation. Even so, the bill leaves room for activity-based rewards. Programs tied to transactions, payments, platform use, staking, governance, or loyalty activity could remain possible. Future rules from the SEC, CFTC, and Treasury would guide those reward programs. As a result, crypto firms may keep some customer incentives under narrower conditions.
Banks gain a partial win through the passive yield ban. They have argued that stablecoin reward programs could pull deposits away from insured bank accounts. Crypto firms have taken a different position. They argue that rewards linked to platform activity do not equal bank interest and should not face a full ban.
Read More: Crypto Funds Add $858M as CLARITY Act Optimism Boosts Demand
The bill also preserves protections for software developers and infrastructure providers. That language matters to DeFi advocates watching the Senate’s response to law-enforcement concerns.
The Blockchain Regulatory Certainty Act language clarifies that non-custodial blockchain developers and service providers are not money transmitters by default. Building software, validating transactions, providing computation, or supporting networks would not create that status alone.
At the same time, the bill keeps criminal liability for people who intentionally move funds for another person while knowing the assets are linked to unlawful activity.
This structure draws a line between customer-facing control and core network participation. Regulation would attach more clearly to control, custody, and intermediation.
The DeFi language also addresses decentralized governance systems. Routine governance actions, infrastructure participation, and limited cybersecurity emergency measures would not automatically create centralized control.
Other sections would direct regulators to create rules for non-decentralized finance trading protocols. They would also require risk-management programs for intermediaries that route activity through DeFi protocols.
In addition, the bill instructs the Treasury to issue guidance for certain web-hosted front ends. Those provisions give regulators channels to address financial crime, sanctions evasion, fraud, and market manipulation.
The updated CLARITY Act moves Senate crypto regulation closer to public review, with stablecoin yield limits, clearer digital asset rules, and protections for DeFi developers. Still, unresolved ethics concerns could shape its path before the bill reaches the Senate floor.
