Summary
- On Sunday, Senate Republicans unveiled a revised version of the Clarity Act, termed their "last, best and final offer," ahead of a crucial cloture vote scheduled for Tuesday, which requires 60 votes, including support from at least seven Democrats.
- Trump has agreed to tougher ethics regulations, including provisions for divestment or blind trusts, enforcement by state attorneys general, and no sunset clause; modifications also affected the Blockchain Regulatory Certainty Act and introduced stablecoin "circuit breaker" language.
- Initial reactions from the industry are optimistic, with Galaxy's Alex Thorn increasing the likelihood of the bill passing in 2026 from 10% to 25%, although the tight legislative timeline presents challenges.
The crypto sector is experiencing a wave of optimism as it approaches a pivotal week for policy developments.
Senate Republicans released a new version of the Clarity Act on Sunday night, aiming to secure Democratic support ahead of Tuesday's procedural vote on advancing the legislation. To invoke cloture, 60 senators must vote in favor, necessitating at least seven Democrats to join Republicans, and possibly more if some Republicans choose to abstain.
Myriad: Will Congress pass the Clarity Act? Make your prediction here.This latest proposal, which Republicans are dubbing their “last, best and final offer,” features a revised ethics framework that has received President Donald Trump’s endorsement, alongside concessions addressing key issues that have stalled negotiations, such as the Blockchain Regulatory Certainty Act and stablecoin yields.
Senate Democrats convened for two meetings on Sunday, including a full caucus discussion, prior to the proposal’s release. They have yet to respond to the revised text, but Republicans are urging them to support a bill they assert now accommodates over 120 Democratic requests.
“Voting against this bill on Tuesday means rejecting significant ethical reforms regarding politicians’ investments, ceding American leadership in digital assets to foreign competitors, and leaving U.S. citizens without protections in digital asset markets,” stated Senator Cynthia Lummis (R-WY), a primary architect of the bill, in a post on X.
Key Updates in the Clarity Act
One of the most significant updates is Trump’s approval of approximately 80% of the original ethics proposal put forth by Senators Thom Tillis (R-NC) and Ruben Gallego (D-AZ) last July, addressing a major concern for Democrats regarding Trump’s crypto business activities.
Recent amendments allow state attorneys general to enforce restrictions on officials involved in issuing or sponsoring digital assets or holding significant financial stakes, a concept that the White House had previously resisted. The definition of “covered officials” has also been broadened to include elected officials who have not yet taken office, along with their spouses.
Under the new provisions, covered officials must either divest their financial interests or place them into a qualified blind trust, with civil penalties for any violations. Notably, adult children are exempt from these restrictions, and unlike prior proposals, there is no sunset clause that would have allowed these ethics rules to expire when Trump leaves office in January 2029.
It remains unclear what prompted Trump to shift his stance and accept stricter regulations on his financial interests. Just last month, he expressed to Punchbowl News that he believed the ethics proposal unfairly targeted him.
Last year, Trump disclosed over $1.4 billion in income from various crypto ventures, including around $635 million from his TRUMP meme coin. However, investors in this token faced considerable losses, raising concerns about conflicts of interest and the need for investor protections.
Sources familiar with the negotiations suggest that a meeting on Friday, where advisors, including White House Crypto Council Executive Director Patrick Witt, discussed the issue with Trump, may have influenced his decision. Additionally, crypto industry leaders spent the August recess advocating to senior Trump allies that accepting parts of the ethics deal could strengthen the president's legal position against future investigations.
Furthermore, there could be a financial benefit for Trump in agreeing to divest, as forced divestment may allow him to defer capital gains taxes on the assets he must sell, potentially delaying significant tax liabilities.
DeFi Regulations in the Clarity Act
Another significant change pertains to the Blockchain Regulatory Certainty Act, which clarifies that software developers not handling customer funds will not need to register as money transmitters or comply with the Bank Secrecy Act. However, the latest text removes explicit protections against criminal prosecution under Section 1960, a major concession to prosecutors and allies like Senator Catherine Cortez Masto (D-NV).
Alex Thorn, Head of Research at Galaxy Digital, termed this a “setback” for advocates of the provision, while other industry insiders expressed disappointment, noting that it maintains the legal rationale used to prosecute Tornado Cash developer Roman Storm, who was convicted last year for operating an unlicensed money transmitting business despite his defense arguing he had no control over user funds.
On the positive side, Republicans enhanced civil protections within the bill, ensuring that developers and service providers who do not manage customer funds are not classified as money transmitters under the Bank Secrecy Act. These protections have also been extended to miners and validators for the first time.
While banks received a concession, it was not the one they desired. The Tillis-Alsobrooks yield agreement from May was preserved, rejecting banking industry calls to widen the prohibition on stablecoin rewards. Instead, “circuit breaker” language was added, which would allow the Treasury Secretary to intervene if there is evidence of significant deposit migration from community banks to stablecoins.
This circuit breaker concept, proposed by Tillis in July, is viewed as a “test” to determine whether banks' concerns are genuinely about deposit migration. If banks continue to raise objections despite the circuit breaker, Tillis suggested that those concerns might be unfounded.
A spokesperson for the American Bankers Association did not respond to requests for comment. It remains uncertain whether this concession will sway the two Republican senators, Jerry Moran (R-KS) and Josh Hawley (R-MO), who have indicated they would oppose the bill without bank-supported amendments.
Changes to the ‘Ag Title’
The revised text also modifies the “Ag title,” which pertains to the Senate Agriculture Committee's section of the bill, amid extensive negotiations between crypto exchanges and Senate Democrats regarding vertical integration, exemptive authority, affiliate trading, and conflicts of interest involving digital commodity exchanges, brokers, and dealers.
The updated language clarifies that state consumer protection laws still apply, and that protections for developers do not exempt them from derivatives laws or impact prediction markets, addressing concerns raised by Native American tribes regulating gaming.
It remains to be seen if these updates will be sufficient to influence the outcome of Tuesday's vote on a bill that only hours ago appeared to be on the brink of failing its initial procedural step. Press representatives for Senators Ruben Gallego (D-AZ), Angela Alsobrooks (D-MD), and Kirsten Gillibrand (D-NY) did not respond to requests for comment by the time of publication.
In the meantime, early reactions from the crypto industry are emerging, with many expressing positivity about the changes.
“[T]his is still overall a great bill. There probably will never be another one as good for crypto in our lifetime, and it should pass,” commented Gabe Shapiro, a crypto attorney at MetaLeX Labs.
Thorn, who had previously assessed the chances of passage in 2026 at just 10%, raised that estimate to 25% on Monday following the announcement of the new text, though he cautioned that the tight legislative schedule remains a significant obstacle, particularly if the House needs to consider the Senate’s version during a lame-duck session.
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