Through a glass darkly? Final Clarity Act draft is do or die

Senate Republicans have released what they are calling the final draft of the Digital Asset Market Clarity Act (H.R. 3633), the bill that would settle whether the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) regulates a given digital asset. The redraft folds in 126 changes sought by Senate Democrats and arrives alongside a set of ethics restrictions that President Trump has agreed to accept. A cloture vote is scheduled for Tuesday, 15 September, and needs 60 votes to send the bill to debate.

What the bill does

The CLARITY Act sets criteria for classifying a digital asset as a security or a commodity, and hands the CFTC jurisdiction over digital commodities while leaving restricted digital assets and securities offerings under the jurisdiction of the SEC. The redraft also narrows the money-transmission definition for software developers under the Blockchain Regulatory Certainty Act, so that businesses which never take custody of consumer funds, such as wallet software providers and node operators, fall outside state money-transmitter licensing regimes.

The ethics trade

The bill's path forward turned on an ethics fight. Democrats made ethics provisions a condition of support, and the final draft reflects the bipartisan Tillis-Gallego proposal: federal officials, judges and their spouses (though not adult children) are barred from crypto-related dealings while in office, with state attorneys-general given a role in enforcement. President Trump accepted:

unprecedented ethics restrictions, holding every federally elected official, judge, and their spouses to some of the toughest ethics restrictions in U.S. history.

said Senator Cynthia Lummis (R-WY).

Other provisions

The redraft gives the Treasury Secretary an 18-month circuit-breaker power to impose emergency deposit-outflow limits on community banks exposed to stablecoin runs, and places affiliate-trading and conflict-of-interest oversight for digital asset intermediaries with the Agriculture Committee.

This was promptly criticised by "just about every banking group" in America in a joint letter which said:

A circuit breaker that activates only after substantial deposit flight has already occurred is not a safeguard at all.

Death and Taxes

What does not change is the tax treatment of digital assets, so while projects can seek to raise funds with some certainty, the tokens minted in connection with that fundraising will be treated as property, meaning that most digital asset business will continue to use international structures where high speed digital asset transactions and trading will not trigger uncertain and overly complicated taxation outcomes. It

The numbers

Republicans hold 53 Senate seats, so at least seven Democrats need to support Tuesday's cloture vote. The legislative window is narrow: campaigning for the November midterms effectively begins on 5 October. Senator Lummis has warned that if the bill fails this Congress, the next realistic opportunity for market-structure legislation will not arrive until 2030, given the two-year congressional cycle and the need to reintroduce the bill from scratch. Betting markets have moved on the news: odds on the bill becoming law in 2026 rose from 22 percent to 32 percent after the draft's release.

What now

The whole crypto sector will be watching Tuesday's cloture vote and the bill's path through any remaining floor amendments.

Clarity's contrast with other major jurisdictions is instructive. The EU's Markets in Crypto-Assets Regulation is already fully in force with a single passportable licence, Cayman's VASP regime has been processing and issuing licences all this year, the UK's FCA regime will not be fully live until 2027, and Australia is running its own parallel deadline, with ASIC requiring digital asset firms to hold a financial services licence by 30 September 2026 ahead of dedicated digital asset legislation taking effect in April 2027. Every major jurisdiction is converging on comprehensive licensing for digital assets; only the timing, and in the United States' case, the durability of the underlying political deal, still differs.