Senators File CLARITY Act Amendments on Yield and DeFi

Senators getting in line with amendments on the CLARITY Act, which the Senate Banking Committee is kicking off its mark-up for. The proposed amendments are aimed at stablecoin yield and DeFi regulations. Its result may determine how heavily the bill lands on crypto markets.

CLARITY Act Amendments Put Yield and DeFi in the Spotlight

The committee dropped the 278-page CLARITY Act draft late Monday night. The draft follows five months of bipartisan discussions. Most of the industry saw the full language for the first time on Tuesday.

Amendments were due by 5 P:M. Tuesday. That deadline triggered 137 separate proposed amendments . Several filings aim to tighten definitions and reduce gray areas in the bill.

According to a report,  Yield on stablecoins is one of the main battlegrounds. Bipartisan amendments from Sens. Angela Alsobrooks and Thom Tillis propose refining what activities qualify users to earn yield. The challenge is to have a sharper demarcation between allowed yield models, and disallowed structures.

DeFi is the other big flashpoint. Sens. Pete Ricketts and Cynthia Lummis proposed revisions to the decentralized finance language. In response to industry pushback over a new DeFi section that raised fresh concern about how protocols would be treated, the move comes.

Sen. Chris Van Hollen suggested language that would prevent government officials from benefiting from crypto-related business interests. He also proposed an anti-touting provision that would mandate disclosures from those promoting crypto while benefiting financially.

Some of those ethics proposals may not get voted on in markup. The Banking Committee has limited reach on ethics rules. That means parts of the fight could shift to later phases of the Senate process.

Warren’s Amendments Raise the Stakes Ahead of Markup

Sen. Elizabeth Warren submitted more than 20 amendments. Her package has provisions to ban yield payments on stablecoins. It also aims to roll back crypto-friendly guidance the OCC issued last year.

A few amendments drift away from the core crypto debate. Sen. Jack Reed submitted an amendment in support of Federal Reserve Chairman Jerome Powell during a Department of Justice criminal investigation. That filing indicated how some lawmakers may be using markup time to carry out more sweeping political messaging.

White House Crypto Council Executive Director Patrick Witt said officials will add the ethics language later. He said it would come after committee passage and before a full Senate vote. That points to more changes ahead even after the markup wraps.

In parallel, Senate Agriculture Committee Chairman John Boozman announced a rescheduled markup. Senate committee sets January 27 markup. The bill text is expected to be released the week before.