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CLARITY's newest 14 pages hand the DeFi coverage test to the SEC and CFTC
The bill grew again last week, and the new pages delegate the hard definition to regulators while the ethics language Democrats made their price stayed out. Trump has not said what curbs he will accept.
The Investor · Invest desk
What happened
- The draft released last week adds 14 pages telling the SEC and CFTC to determine whether people or groups controlling non-decentralized finance trading protocols owe securities, commodities and AML compliance.
- None of the big changes to the ethics provisions that Democrats set as a red line for their support appear in the latest version of the text.
- Trump met advisors late last week, according to Cointelegraph, to discuss whether he would agree to further curbs on his multi-billion dollar crypto empire.
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Why it matters
- constraint A protocol operator reading the draft this week cannot learn from it whether it is covered, because the coverage test itself is what the two agencies are being told to work out.
- decision The vote now waits on a judgement about the President's own holdings, taken inside the White House and on his timetable, not on any of the market-structure language the senators spent the year drafting.
- exposure The drafters picked control as the hook, so identifiable people and groups behind a trading protocol, and not the code they published, become the parties the agencies can reach.
- contradiction Witt's weekend confidence and the unchanged ethics section point in opposite directions on whether a deal exists, and one of the two is posturing.
Fourteen pages out of more than 630 is about one page in 45 [6], and those fourteen do not impose an obligation on anyone. They direct the SEC and the CFTC to determine whether people or groups controlling "non-decentralized finance trading protocols" must comply with securities, commodities and anti-money laundering requirements [2]. The duty, if it arrives, arrives by rulemaking. Two agencies get to define control, and two agencies get to decide what makes a protocol insufficiently decentralized.
A bill now above 630 pages that has doubled since May 2025 started at roughly 315 [7]. A year of work by Democratic and Republican senators added the rest [1]. It did not add the ethics changes Democrats named as their red line for supporting the bill [3].
Trump met advisors late last week to discuss whether he would agree to further curbs on his multi-billion dollar crypto empire, Cointelegraph reported, and whether he will concede anything on the ethics provisions is not clear [4]. Drafting capacity is not the scarce input here. Senate staff spent a year producing several hundred pages of market-structure text, and the vote count turns on language about one man's business.
Altcoin Daily said the CLARITY vote, the Federal Reserve's interest rate decisions and other positive developments could together make this "crypto's biggest week ever" [8]. Carl Higbie of NewsMax said that if the bill passes, "banks would shift trillions into this market overnight. Thousands of people, maybe even you if you hold a little bit of it, would become millionaires overnight" [9]. Cointelegraph, which carried both claims, called that "not a particularly likely scenario at this point in time" [10].
If Trump accepts curbs, the market-structure text probably passes close to as drafted, and the argument over what counts as non-decentralized moves to the two agencies on their own timetable [2]. If he accepts nothing, the 630 pages become the opening position for the next attempt [1]. There is a third path, in which the new language draws opposition of its own once operators work out that the perimeter is set by whoever writes the rule.
I'd expect the ethics text to decide the vote, because the DeFi pages delegate and the ethics pages bind [2][3]. Against that, White House crypto advisor Patrick Witt posted on the weekend that it was a "bad day to be a Clarity Act doomer" [5].
What to watch
- Whether Trump agrees to any curb on his crypto holdings, which is what Cointelegraph reports the Democrats' red line is about.
- Whether a subsequent draft writes the non-decentralized definition into statute instead of leaving it to SEC and CFTC determination.
- Any timetable the SEC or CFTC gives for making the determination the 14 pages assign them.