Senate Expected to Release Consolidated Draft of CLARITY Act Amid Ongoing Negotiations

The U.S. Senate may release a consolidated draft of the CLARITY Act this week, which aims to regulate the crypto market structure. The bill combines versions from the Senate Banking and Agriculture committees, but negotiations are ongoing over ethics provisions and decentralized finance (DeFi) regulation.

The market had expected a Senate floor vote in the week beginning July 20, but the schedule may slip due to disagreements on key issues. People familiar with the matter said major provisions are still under negotiation.

Democratic Senator Elizabeth Warren expressed concerns that the current draft could exclude some DeFi participants from the scope of the Bank Secrecy Act (BSA), making it harder to track illicit funds and enforce sanctions.

Faryar Shirzad, Coinbase's chief policy officer, argued that an unclear regulatory environment gives bad actors openings. He stressed that the CLARITY Act clearly imposes obligations on brokers, dealers, and exchanges, including know-your-customer (KYC) requirements and anti-money laundering programmes.