CLARITY Act Leak Reveals Critical Omission: Senate Bill Draft Excludes Controversial Stablecoin Revenue Provision

WASHINGTON, D.C. — A significant development in cryptocurrency regulation emerged this week when an unfinished draft of the U.S. Senate Banking Committee’s comprehensive crypto market structure legislation, known as the CLARITY Act, leaked ahead of its official release. The leaked document reveals a critical omission that has immediately sparked industry-wide analysis: the exclusion of a previously anticipated provision related to stablecoin revenue. This development, first reported by Eleanor Terrett on social media platform X, signals potential compromises in the ongoing legislative process that could shape the future of digital asset regulation in the United States.

CLARITY Act Draft Leak Reveals Legislative Compromise

The leaked CLARITY Act draft represents an incomplete version of what could become landmark cryptocurrency legislation. According to industry sources cited in Terrett’s report, committee members reached a preliminary agreement this week following a closed-door meeting last week. The document’s current state reflects ongoing negotiations between various stakeholders in both the traditional finance and decentralized finance sectors. Notably, the draft excludes specific language concerning stablecoin revenue mechanisms that had been discussed in earlier legislative conversations. Instead, the document incorporates two ethics regulations under the committee’s jurisdiction, including provisions addressing felonies and insider trading within cryptocurrency markets.

This legislative development occurs against a backdrop of increasing regulatory scrutiny of stablecoins, which are digital assets typically pegged to traditional currencies like the U.S. dollar. Stablecoins have grown to represent a significant portion of cryptocurrency market activity, with their total market capitalization exceeding $160 billion as of early 2025. Regulatory clarity around these assets has become a priority for lawmakers concerned about financial stability and consumer protection. The exclusion of revenue-related provisions suggests lawmakers may be prioritizing different regulatory approaches in the current draft.

Stablecoin Regulation Takes Center Stage

The absence of stablecoin revenue provisions in the leaked CLARITY Act draft represents a notable shift from previous legislative discussions. Stablecoins, particularly those issued by private companies, generate revenue through various mechanisms including interest earned on reserve assets and transaction fees. Regulatory treatment of this revenue has been a point of contention among lawmakers, industry participants, and consumer advocates. Some proposals had suggested treating stablecoin issuers similarly to banks, while others advocated for different regulatory frameworks.

Industry analysts note that the current approach may reflect several considerations:

• Regulatory Prioritization: Lawmakers may be focusing first on establishing clear jurisdictional boundaries before addressing revenue-specific provisions
• Technical Complexity: Revenue mechanisms vary significantly between different stablecoin models, complicating uniform regulation
• International Coordination: U.S. regulators may be awaiting guidance from international bodies like the Financial Stability Board
• Consumer Protection Focus: The draft may prioritize transparency and reserve requirements over revenue regulation

This development follows increased regulatory attention on stablecoins globally, with jurisdictions including the European Union implementing comprehensive frameworks through legislation like MiCA (Markets in Crypto-Assets Regulation).

Section 601: Software Developer Protections Signal DeFi Compromise

A particularly noteworthy section of the leaked CLARITY Act draft appears in Section 601, which addresses protections for software developers. This provision represents a significant compromise between traditional financial regulatory approaches and the unique characteristics of decentralized finance (DeFi) ecosystems. The language suggests lawmakers are attempting to balance necessary consumer protections with the innovation-friendly environment that has characterized much of the cryptocurrency sector’s growth.

Legal experts familiar with the draft note that Section 601 could establish important precedents for how decentralized technologies are regulated. The provision reportedly distinguishes between active participation in illegal activities and the development of neutral technology, potentially protecting developers who create open-source software used in both legitimate and illicit contexts. This distinction has been a central concern for the developer community, which has expressed worries about potential liability for unintended uses of their code.

The inclusion of these protections alongside ethics regulations concerning felonies and insider trading creates a balanced regulatory approach. This combination suggests lawmakers recognize both the need for clear rules against misconduct and the importance of not stifling technological innovation through overbroad liability standards.

Legislative Process and Industry Response

The CLARITY Act’s progression through the legislative process follows years of discussion about appropriate cryptocurrency regulation. The Senate Banking Committee, chaired by Senator Sherrod Brown, has been working on comprehensive digital asset legislation since at least 2023. The current draft represents months of negotiation between committee members, industry stakeholders, and regulatory agencies including the Securities and Exchange Commission and Commodity Futures Trading Commission.

Industry response to the leaked draft has been cautiously optimistic. Major cryptocurrency advocacy organizations have noted the balanced approach evident in the current language. However, some stablecoin issuers have expressed concern about the absence of clear revenue provisions, noting that uncertainty could hinder further innovation and investment in the sector. Traditional financial institutions, meanwhile, have generally welcomed the inclusion of ethics regulations and consumer protections.

The legislative timeline remains uncertain, with the official release of the CLARITY Act draft expected in the coming weeks. Following release, the bill will undergo committee markup, where additional amendments and provisions may be added. The final version must then pass both the Senate and House of Representatives before reaching the President’s desk for signature.

Comparative Analysis: U.S. vs. International Approaches

The CLARITY Act development occurs within a global context of evolving cryptocurrency regulation. Different jurisdictions have taken varied approaches to stablecoin regulation, creating an international patchwork of standards. The table below illustrates key differences in regulatory approaches:

This comparative context helps explain the careful approach evident in the CLARITY Act draft. U.S. lawmakers appear to be studying international precedents while crafting legislation appropriate for the unique characteristics of American financial markets and technological innovation ecosystems.

Conclusion

The leaked CLARITY Act draft represents a significant milestone in the ongoing development of cryptocurrency regulation in the United States. The exclusion of stablecoin revenue provisions, coupled with the inclusion of ethics regulations and software developer protections, suggests a carefully balanced legislative approach. This development reflects both the complexity of regulating emerging technologies and the necessity of creating frameworks that protect consumers while fostering innovation. As the legislative process continues, stakeholders across the cryptocurrency ecosystem will closely monitor how these provisions evolve and what final form the CLARITY Act takes. The ultimate impact of this legislation will extend far beyond stablecoin revenue considerations, potentially shaping the future of digital asset regulation for years to come.

FAQs

Q1: What is the CLARITY Act?
The CLARITY Act is proposed U.S. legislation being developed by the Senate Banking Committee to establish a comprehensive regulatory framework for cryptocurrency markets, addressing issues including market structure, consumer protection, and jurisdictional boundaries between regulatory agencies.

Q2: Why is the exclusion of stablecoin revenue provisions significant?
This exclusion suggests lawmakers may be prioritizing different regulatory approaches or awaiting further technical analysis before addressing how stablecoin revenue should be treated. It represents a shift from some earlier discussions that had considered treating stablecoin issuers similarly to financial institutions.

Q3: What are the ethics regulations included in the leaked draft?
The draft includes provisions addressing felonies and insider trading within cryptocurrency markets. These regulations aim to establish clear standards of conduct and create enforcement mechanisms similar to those in traditional financial markets.

Q4: How does Section 601 protect software developers?
Section 601 appears to distinguish between active participation in illegal activities and the development of neutral technology. This could protect developers who create open-source software that others might use for illicit purposes, provided the developers themselves aren’t directly involved in illegal activities.

Q5: What happens next in the legislative process?
The official draft will be released in the coming weeks, followed by committee markup where amendments can be proposed. The bill must then pass both chambers of Congress before being sent to the President for signature. The entire process could take several months or longer depending on political dynamics and further negotiations.