Senate Releases Revised Clarity Act with Ethics Provision and Developer Protections

The Senate has released a revised version of the Clarity Act, which addresses key issues related to cryptocurrency and digital assets. The latest text combines elements from both the Senate Agriculture Committee and Senate Banking Committee versions that passed out of their respective panels over the past year.

One major sticking point was how to prevent public officials from profiting from digital assets while in office. Ethics had been a contentious issue, particularly after Trump's financial disclosures revealed millions of dollars tied to his family's company, World Liberty Financial.

The revised text includes an ethics provision that blocks public officials and their spouses from issuing or sponsoring digital assets, but allows them to invest in these assets. The Justice Department would be responsible for enforcing this provision, although some Democrats have expressed concerns about the involvement of state attorneys general.

Another key aspect of the bill is the Blockchain Regulatory Certainty Act, which provides a safe harbor for non-custodial developers and clarifies that they are not money transmitters. This section has support from much of the crypto industry, who see it as providing much-needed legal certainty for software developers and preventing innovation from moving offshore.

However, some law enforcement groups and Catholic leaders have warned that this provision could weaken safeguards against human trafficking and hinder investigations.