The 309-page draft expands the January text by 31 pages, adding a stablecoin yield compromise, insider trading rules, and an insolvency safe harbor ahead of Thursday's markup.
The Senate Banking Committee released a 309-page draft of the Digital Asset Market Clarity Act of 2025 (CLARITY Act) late Tuesday, expanding the January text by 31 pages and setting up a Thursday markup vote that will determine whether the bill advances or stalls again. The new draft incorporates the Tillis-Alsobrooks stablecoin yield compromise, adds an insolvency safe harbor for digital commodity positions, and applies insider trading laws to digital assets for the first time. The markup session, scheduled for 10:30 AM ET, gives committee members until tomorrow to submit amendments. The ethics provisions that derailed the January version remain unresolved, leaving a binary risk for crypto markets that have priced in a clearer regulatory path.
The simple market read treats the stablecoin language as a green light for yield-bearing stablecoins. The better read recognizes that the compromise imposes tight limits designed to stop stablecoins from functioning as unregulated bank deposits. The bill still needs to survive a markup where Elizabeth Warren has signaled she will fight for ethics safeguards that would bar senior government officials from profiting on crypto. A single amendment that reopens the stablecoin debate could fracture the bipartisan coalition that carried the bill through the House in July 2025.
The most consequential change from the January draft sits in Section 404, which now contains the language negotiated by Senators Thom Tillis and Angela Alsobrooks. The compromise allows regulated stablecoin issuers to offer certain forms of yield or rewards, a provision that had been a central sticking point in earlier negotiations. The January text stalled precisely because lawmakers could not agree on whether yield turned stablecoins into securities or unlicensed banking products.
The compromise creates a narrow path for yield. Issuers that register under the new framework and meet capital, liquidity, and disclosure requirements can offer rewards tied to the underlying reserve assets. The language does not mandate pass-through interest. It permits yield structures that resemble loyalty programs or token-based incentives, provided they do not constitute a claim on the issuer’s general assets. This distinction aims to keep stablecoins outside the definition of a security while still allowing some form of user compensation.
The limits are where the market read gets more complicated. The bill caps the yield rate, ties it to a reference rate on reserve assets, and requires real-time attestation of reserves. Issuers cannot guarantee returns or market yield as a fixed rate. The oversight framework gives the primary regulator–likely the Fed for bank-issued stablecoins and a state-federal hybrid for nonbank issuers–authority to suspend yield programs if they threaten financial stability. For traders, the implication is that stablecoin yield will not replicate money-market fund returns. The product will exist, yet the economics will be constrained. The bill also prohibits yield on stablecoins used as margin or collateral in derivatives markets, a detail that directly affects prime brokerage desks and centralized exchanges.
Two new sections address enforcement and market structure risks that the January draft left untouched. Section 109 applies insider trading laws to digital assets, and Section 702 creates an insolvency safe harbor for digital commodity positions.
The provision amends the Securities Exchange Act to explicitly cover digital assets, closing a gap that prosecutors have tried to bridge through novel applications of wire fraud statutes. The language defines “digital asset” for insider trading purposes and gives the SEC and CFTC joint enforcement authority depending on whether the asset is a security or a commodity. The practical effect: exchange employees, protocol insiders, and market makers who trade on material nonpublic information about listings, delistings, or protocol changes face the same liability as equity traders. This is not a theoretical risk. The DOJ has already brought insider trading cases against former Coinbase and OpenSea employees. Section 109 gives those cases a statutory foundation, which raises the stakes for anyone with early access to listing decisions or treasury management moves.
The Section 702 Insolvency Safe Harbor is a structural change that derivatives desks have been requesting since the FTX collapse. It allows counterparties to terminate, liquidate, and net out digital commodity positions and access collateral without being stayed by a bankruptcy court. The language mirrors the safe harbor that already exists for conventional derivatives under the Bankruptcy Code. For prime brokers and exchanges that offer margined products, this provision reduces the risk that a single insolvency freezes customer collateral for months. The safe harbor applies only to “digital commodities” as defined elsewhere in the bill, which means assets that qualify as commodities under the CFTC’s jurisdiction–likely Bitcoin and Ether, and potentially others depending on the final classification framework. Assets deemed securities would not receive the same treatment, creating a bifurcated risk profile that traders need to map onto their collateral arrangements.
The new draft includes substantial revisions to Title I, specifically Sections 102, 104, and 108, which govern registration pathways, exemption criteria, and the joint SEC-CFTC rulemaking process. The direction is toward a more workable registration regime for exchanges and brokers. The January draft imposed a dual-registration requirement that industry groups argued was unworkable. The revised language creates a single portal for registration and allows firms to designate a primary regulator based on the asset mix of their platform.
“One interesting worth noting now is the inclusion of the Build Now Act (sec 904),” Alex Thorn, Head of Firmwide Research at Galaxy Digital, wrote.
Section 904 folds in the Build Now Act, a separate legislative effort that creates a streamlined path for tokenized securities and digital asset issuance without requiring full SEC registration for certain exempt offerings. The inclusion signals that the Senate is trying to bundle multiple crypto bills into a single vehicle, which increases the odds of passage. It also increases the surface area for opposition. The Build Now Act provisions would allow issuers to raise capital using digital tokens under an updated Regulation A-style framework, with caps on offering size and investor limits. For tokenization platforms and real-world asset protocols, this is the most directly relevant part of the bill.
The January draft stalled over ethics provisions, and the new text does not resolve the dispute. Elizabeth Warren has stressed that any final bill must include safeguards preventing senior government officials from financially benefiting from cryptocurrencies. The current draft leaves those provisions largely unchanged from January, meaning the same coalition that blocked the bill before can do so again.
Warren’s position is that the bill creates a massive new regulatory framework and a potential windfall for digital asset holders, including members of Congress and executive branch officials. She wants a ban on officials trading digital assets and a disclosure regime that covers spouses and dependent children. The Tillis-Alsobrooks compromise on stablecoins was supposed to unlock broader support. The ethics fight is separate. Warren has enough leverage to force a markup delay or to attach an amendment that peels off Republican votes. The committee’s composition means a single defection can stall the bill.
The markup is scheduled for Thursday at 10:30 AM ET. Committee members have until tomorrow to submit amendments. The binary risk: if an ethics amendment passes that is unacceptable to the bill’s sponsors, the markup could be postponed or the bill could be reported out with a poison pill that kills it on the floor. If no ethics amendment is offered, or if a compromise is reached before the gavel, the bill likely advances with strong bipartisan support. The House already passed a version in July 2025 with broad backing, so Senate passage would set up a conference committee and a final vote within the 360-day effective date window specified in Section 906.
For traders, the CLARITY Act is not just a policy document. It is the primary vehicle for resolving the jurisdictional ambiguity that has kept institutional capital on the sidelines. The bill defines which assets are securities, which are commodities, and which are stablecoins, and it assigns regulators accordingly. The CLARITY Act’s Bitcoin and Ethereum securities exemption remains intact in the new draft, which means the two largest digital assets would fall under CFTC oversight. That outcome is largely priced in. The stablecoin and insolvency provisions are new information.
The clearest signal that the bill will advance is a bipartisan ethics amendment filed before the markup deadline. If Tillis and Alsobrooks co-sponsor an ethics provision with Warren, the path to passage is clear. A second signal is the absence of amendments that reopen the stablecoin yield compromise. The Tillis-Alsobrooks language is fragile; any amendment that changes the yield cap or the oversight trigger could unravel the deal.
The primary risk is an amendment that either bans stablecoin yield entirely or removes the limits that prevent stablecoins from functioning as deposits. Either extreme would fracture the coalition. A ban would lose industry support and likely fail on the floor. A removal of limits would trigger opposition from banking regulators and Warren’s allies. The secondary risk is a markup delay. If the committee cannot resolve the ethics fight by Thursday morning, the session could be postponed, pushing the bill into a crowded summer calendar where it competes with appropriations and debt ceiling negotiations.
Risk to watch: The ethics provisions remain the last major obstacle; a failure to reach a bipartisan compromise before Thursday’s markup could stall the bill and unwind the regulatory clarity trade that has supported crypto markets.
The insolvency safe harbor and insider trading provisions are likely to survive regardless of the ethics fight. Those sections have broad support and could be spun out into a narrower bill if the CLARITY Act stalls. For now, the base case is that the markup proceeds, the bill advances, and the 360-day implementation clock starts ticking. The tail risk is that the same fight that killed the January draft repeats itself, and the market’s regulatory clarity trade unwinds.
Drafted by the AlphaScala research model and grounded in primary market data – live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.