Senators Release Discussion Draft That ‘Builds on’ House’s CLARITY Act

Four senators outlined their proposed steps for creating digital asset market structure legislation and invited stakeholders to comment on the draft and answer a range of questions about the topic.

The initial discussion draft and the request for information were released Tuesday (July 22) by Sen. Tim Scott of South Carolina, Sen. Cynthia Lummis of Wyoming, Sen. Bill Hagerty of Tennessee and Sen. Bernie Moreno of Ohio, according to a Tuesday press release from the Senate Banking Committee.

The senators’ discussion draft “builds on” the CLARITY Act that was passed by the House last week, according to the release.

“My colleagues and I in the House and Senate share the same goal: to provide clear rules of the road for digital assets that protect investors, foster innovation, and keep the future of digital finance anchored in America,” Scott, who is chairman of the Senate Banking Committee, said in the release.

The committee highlighted several aspects of the discussion draft in the release, noting that it defines “ancillary assets” to clarify which digital assets are not securities, and creates disclosure requirements for offers, sales or distributions of these assets.

The discussion draft also requires the Securities and Exchange Commission to promulgate new rules that exempt certain offers or sales of ancillary assets from SEC registration, define what constitutes an investment contract, and tailor existing securities regulations to consider the unique characteristics of digital assets, according to the release.

It also includes provisions to prevent illicit finance and to promote responsible banking innovation using digital assets or distributed ledger systems, per the release.

The senators’ request for information released Tuesday includes 35 questions covering these and other issues related to digital assets.

The House passed the CLARITY Act Thursday (July 17) along with two other crypto-related bills that were part of the chamber’s Crypto Week initiative.

The CLARITY Act passed on a 294-134 vote and will now be considered by the Senate.

House Financial Services Committee Chairman French Hill of Arkansas said the CLARITY Act “establishes clear rules of the road by creating a functional regulatory framework for digital assets.”

It was reported Thursday that the fate of the CLARITY Act in the Senate remains uncertain because Democrats who had supported the digital assets-focused bill in committee in the House began to back away under pressure from liberal members and party activists.

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