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Analysis of the Latest Version of the CLARITY Act—Is the Trump Family Still Guaranteed to Profit?

On the evening of May 12th, the U.S. Senate Banking Committee posted a 309-page draft of the CLARITY Act on its website. This May draft is much longer than the 278-page draft from January.

Moreover, at 10:30 a.m. on May 14th, this draft titled "CLARITY Act" will undergo a markup vote in the Senate Banking Committee. For an industry that has long operated in regulatory gray areas, this is a late and heavyweight document.

It marks the first time at the federal level in the U.S. that a relatively complete digital asset regulatory framework has been established—from the definition and yield restrictions of stablecoins, to legal boundaries for DeFi developers, and to the delineation of jurisdiction between the SEC and CFTC.

The Game of Stablecoin Yield Restrictions

Section 404 is the most fiercely contested clause in the entire draft. The text explicitly prohibits stablecoin issuers and their affiliates from paying passive yields to U.S. users on holdings of stablecoins in a manner that is economically or functionally equivalent to bank savings interest (simply put, if you hold USDC on Coinbase, you can no longer earn interest like a bank deposit).

However, the yield function is not completely shut down. The bill retains reward mechanisms based on real activities, such as transaction cashback, liquidity incentives, staking rewards, and governance voting rewards—this compromise stems from a bipartisan agreement reached by Senators Thom Tillis and Angela Alsobrooks on May 2nd.

Legal Boundaries for DeFi Developers

Title III is exclusive to the Senate version. Its core task is to answer a legal question that has never been explicitly addressed before: Under what conditions would a DeFi protocol be considered controlled rather than truly decentralized?

The draft’s answer is: control, discretion, or the ability to modify/review the protocol’s operation. At the same time, the draft explicitly excludes core infrastructure—such as node operators, validators, sequencers, and oracle providers—from the definition of controlling a protocol.

Oracle service providers like Chainlink or Pyth will not be deemed controllers just because they provide data to DeFi protocols.

Title III also incorporates the core provisions of the Blockchain Regulatory Certainty Act (BRCA), explicitly protecting software developers who do not custody user assets from being classified as money transfer services. It also preserves developer protections while addressing law enforcement concerns over criminal tools.

Jurisdictional Boundaries Between SEC and CFTC

Title I resolves a long-standing unresolved jurisdiction issue: which digital assets fall under SEC regulation and which under CFTC regulation.

The revised draft narrows the definition of ancillary assets to only securities and shifts from a joint SEC-CFTC regulatory framework to SEC sole jurisdiction. This change provides a relatively clear compliance path for most functional tokens in the crypto market, eliminating the need to comply with two regulatory agencies simultaneously.

Lack of Ethical Clauses

Beyond the three pillars, one issue is becoming the biggest obstacle to passing the CLARITY Act draft—this 309-page draft contains no ethical restrictions on government officials profiting from regulating the crypto industry.

This gap is not a technical oversight!

According to Bloomberg, the Trump family has profited at least $1.4 billion through crypto ventures—selling WLFI tokens and TRUMP Meme coins.

Senate Democrats Schiff, Warren, and Gillibrand have already made it clear: without corresponding restrictions, they will not support the bill. Polls show that 73% of registered American voters support such restrictions.

Committee Chair Tim Scott believes that ethical clauses are beyond the jurisdiction of the Banking Committee and should be handled separately.

However, with the Senate requiring 60 votes to advance legislation, losing core Democratic support could mean the draft is rejected at the committee stage.

The White House is betting on signing before July 4th, which coincides with the 250th anniversary of American independence, creating enough political pressure to sway some Democrats to cross party lines. But if the ethical restrictions cannot be passed, even the best timing will be futile.

The path from draft to law is difficult, but one thing is already clear: all parties involved have invested real time and stakes in this text. Coinbase withdrawing and then resuming support, joint resistance from banking groups—each trace proves that this industry is being taken seriously.