Senate Unveils New 309-Page CLARITY Act Draft Before Vote

The US Senate Banking Committee has released a new 309 page draft of the Digital Asset Market Clarity Act, also known as the CLARITY Act, which is setting the stage for Thursday’s pivotal markup vote as per well-known crypto journalist Eleanor Terrett. Committee members now have until close of business Wednesday to file for any amendments before the executive session commences.

The release has come after months of deadlock and negotiations that took place at the last minute. Industry stakeholders are watching closely and are waiting to see if Democrats will support the revised bill or not.

Stablecoin Yield Compromise Addresses Coinbase CEO’s Core Concern

In the new draft, the stablecoin yield compromise that was negotiated by Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks has been included. This clause was one of the main objections that was raised by Coinbase CEO Brian Armstrong. He even withdrew his support for the original January markup over this same issue.

Under the bipartisan agreement, stablecoin issuers cannot pay yield on passive stablecoin balances, which means that there will be no payments for simply holding dollar-backed crypto tokens. However, activity-based rewards (those tied to actual platform use, such as payments and transfers) are permitted.

This compromise addresses traditional banks’ fears about deposit migration to crypto platforms while preserving room for innovation in rewarding user engagement.

Section 505 “Tokenization” Language Moved after Exchange Backing

Another concern that has been raised by Armstrong involved Section 505, the so-called “tokenization section.” The original language allegedly would have created a “de facto ban on tokenized equities,” according to Armstrong.

Industry reports indicate this language has now been relocated to a better position within the bill. Major cryptocurrency exchanges have endorsed the updated version, signalling growing industry support for the revised markup.

Tokenization is a process where traditional financial assets such as stocks are converted into digital tokens on the blockchain networks. This process also remains as a hot topic in crypto regulations and this change addresses what many saw as an overly restrictive provision.

Software Developer Protection Balances with Law Enforcement Powers

The new draft includes a compromise on Section 1960 language, which determines whether software developers get classified as money transmitters under federal laws. This section is part of the Blockchain Regulatory Certainty Act (BRCA), embedded within the broader CLARITY Act, and aims to draw a clear line between writing neutral code and operating a financial business.

The compromise protects non-custodial software developers, wallet providers and infrastructure operators from being automatically classified as money transmitters simply for building code that others might use for transactions.

At the same time, it still allows law enforcements to go after bad actors who knowingly support illicit activities such as money laundering or other crimes. Finding this balance has been one of the biggest challenges within the crypto industry.

Ethics Provisions Remain Unclear Despite Democratic Hesitation

The January version of the CLARITY Act did not say much about ethics and conflicts of interest. This was then something that became a concern for several Democrats, who believed the bill needed stronger rules to prevent lawmakers and officials from benefiting unfairly from the crypto industry.

Senator Kirsten Gillibrand clearly said that there will be “no CLARITY Act without an ethics provision,” meaning she may not vote for the bill unless stronger ethics protections are included. Her stance could also influence other Democrats whose support is needed for the bill to move forward.

At the same time, Republican Senator Thom Tillis also warned that he could also oppose the bill of ethics language if it is not added before it leaves the committee stage. This shows that concerns over ethics are not limited to one political party.

As of now, it is still not clear whether the new ethic rules will be added directly into the final version of the bill or introduced separately at a later stage. As the outcome is dependent on the Democratic support, this uncertainty is increasing tension and making Thursday’s vote harder to predict.

Surprise Discovery: Housing Bill Hidden Inside Crypto Legislation

Journalist Eleanor Terrett highlighted that from pages 300-309 of the 309-page draft, there is something unexpected mentioned. According to the post on X, the journalist highlighted that there is mention of the “Build Now Act (Sec. 904),” a housing program that is completely separate from cryptocurrency regulation.

The Build Now Act establishes a first-of-its-kind federal pilot program that ties Community Development Block Grant. Cities that fail to increase homebuilding faster than the national median face a 10% reduction in federal block grant funding. Those funds get redirected to cities exceeding the national median building rate, with the highest-growth municipalities receiving the largest shares.

The program gives metropolitan areas two years to begin construction before HUD evaluates whether cities benefit or face penalties. Cities with median home prices below the national average and those declaring emergency disasters in the past year receive exemptions.

This housing bill inclusion inside a crypto framework is highly unusual and appears to be either a legislative drafting error or an unusual bill-splicing tactic that has caught regulators’ attention.

Timeline and Next Steps

The May 14 markup session will be the Senate’s first official debate on rules for the crypto industry. During the meeting, lawmakers will discuss changes to the CLARITY Act and vote on whether it should move forward.

Even if the Senate Banking Committee approves the bill, it still faces several major steps before becoming law. It must pass a full Senate vote, be aligned with other Senate and House versions of the bill, and finally receive the president’s signature. The White House reportedly wants the bill completed by July 4, increasing pressure on lawmakers to settle disagreements quickly.

Crypto companies are closely watching the outcome because the bill could create the first clear nationwide rules for digital assets in US history. While some concerns from exchanges and banks have been resolved, uncertainty around ethics and conflict-of-interest rules remains a key issue. The next two days could decide whether the crypto industry finally gets regulatory clarity or faces another delay.

Also Read: What Are New AML Rules for US Stablecoins Under GENIUS Act