The Senate Banking Committee has unveiled a new draft of the Clarity Act days before a scheduled markup vote, reopening negotiations over stablecoin oversight, DeFi protections, and ethics rules tied to federal officials’ crypto activities.
Summary
- Senate Banking Committee released a revised 309-page Clarity Act before Thursday’s markup vote.
- Updated legislation permits activity-based stablecoin rewards while banning passive yield for holders.
- Ethics provisions tied to federal officials’ crypto interests remain absent from the latest draft.
According to a statement released by Tim Scott, the updated 309-page proposal came after extended talks between lawmakers, crypto companies, banking lobby groups, and policy negotiators working to resolve disputes that derailed an earlier January markup. Scott said the legislation would provide “certainty, safeguards, and accountability” while strengthening the country’s position in digital finance.
Committee lawmakers are expected to debate and amend the bill during Thursday’s hearing. Momentum around the legislation weakened earlier this year after Coinbase pulled support over restrictions tied to stablecoin rewards, forcing negotiators back to the table to rewrite key sections of the proposal.
Under the revised language, firms would still be barred from paying passive yield simply for holding stablecoins. At the same time, the proposal now allows certain activity-linked incentives connected to payments and platform participation, a compromise that several crypto firms had pushed for during negotiations.
Revised draft adds new DeFi and stablecoin provisions
Included in the latest text is language tied to the Blockchain Regulatory Certainty Act, which would clarify that developers and infrastructure providers that do not custody user assets should not be treated as money transmitters under federal law.
Law enforcement officials and several senators had previously raised concerns that the provision could create obstacles for anti-money laundering enforcement. Earlier this week, Punchbowl News reported that Senators Chuck Grassley and Cynthia Lummis reached an agreement designed to preserve prosecutors’ ability to pursue crypto-related financial crimes.
Following the release of the draft, the DeFi Education Fund said the legislation still contains the protections most important to software developers and infrastructure providers, including BRCA language and safeguards connected to the Exchange Act.
Several structural changes tied to stablecoin oversight also appeared in the updated proposal. State chartered trust companies would be allowed to issue stablecoins until reaching a $10 billion threshold, after which they would transition into mandatory federal supervision.
Reserve requirements were tightened as well. Under the revised framework, regulated stablecoins would need to maintain 1:1 backing using cash or highly liquid assets such as short-term U.S. Treasuries. The language effectively leaves algorithmic stablecoins outside the regulated market structure envisioned under the bill.
Key concerns remain unresolved
One of the largest sticking points heading into Thursday’s markup remains the absence of conflict of interest rules covering federal officials and crypto investments.
Democratic lawmakers have repeatedly argued that ethics safeguards must be included before the legislation can receive bipartisan support. Earlier this week, a spokesperson for Angela Alsobrooks said negotiations with Republicans were continuing, though the spokesperson added that compromise around ethics provisions would be necessary for Democratic backing.
During Consensus Miami 2026, Kirsten Gillibrand also said Democrats would not support the bill without conflict-of-interest language. Appearing at the same event, White House crypto adviser Patrick Witt said the administration supports ethics standards applied consistently across government rather than rules targeting a single officeholder.
After the revised draft became public Monday night, Senate Banking Committee ranking member Elizabeth Warren criticized the legislation for omitting restrictions on crypto-related profits tied to public officials.
Bloomberg previously estimated that Donald Trump and affiliated ventures generated at least $1.4 billion through crypto-related activities, including memecoins and links to World Liberty Financial.
Speaking during a live discussion on X earlier this week, Brian Armstrong said the talks did not deliver every requested change but added that the revised framework preserved the industry’s “must haves.” Armstrong also said Coinbase has been working with several of the world’s largest banks as traditional financial institutions continue exploring crypto integration.
Meanwhile, in a letter distributed to bank executives over the weekend, Rob Nichols warned the current draft could encourage deposit migration from traditional banks into stablecoins. The American Bankers Association and other financial lobby groups have continued lobbying senators for stricter limits tied to stablecoin reward programs ahead of the hearing.
Research published last week by Galaxy Digital has argued that incoming foreign capital tied to stablecoin adoption could offset concerns around domestic deposit movement. According to the report, much of the future growth in stablecoin issuance is expected to originate outside the United States, potentially directing offshore capital into U.S. financial infrastructure.
Even if Thursday’s markup succeeds, Senate negotiators would still need to merge the Banking Committee draft with a separate version already approved by the Senate Agriculture Committee. Final passage in the Senate would likely require support from at least 60 lawmakers, leaving negotiators under pressure to secure Democratic votes while disputes over ethics rules and stablecoin oversight continue.
