Democrats File Anti-DeFi Amendments to CLARITY Act

Ahead of Thursday's Senate Banking Committee markup of the CLARITY Act, members filed more than 100 amendments to the latest version of the bill. The DeFi Education Fund called out 16 in particular it describes as direct threats. We're focused on 15 that directly affect DeFi developers, users, and infrastructure.

What's the Scoop?

• What's Being Targeted: The amendments, submitted by Democratic Senators Cortez Masto, Andy Kim, Chris Van Hollen, Elizabeth Warren, and Jack Reed, would collectively push the bill away from regulating entities with direct control over financial activity, making it easier to treat DeFi developers, front-end operators, digital asset businesses, and even autonomous smart contracts as regulated actors.
• The BRCA Amendments: Amendments 16, 17, 22, 67, and 94 take aim at the Blockchain Regulatory Certainty Act. BRCA says developers and infrastructure providers shouldn't be treated like money transmitters if they don't control user funds, which matters because money transmitter status triggers registration, AML, reporting, and compliance obligations built for financial intermediaries. Amendment 16 reportedly rewrites BRCA to expose developers to these conditions rather than protect them. Amendments 17 and 22 strike developer protections in CLARITY's DeFi sections. Amendment 94 removes BRCA from the bill entirely. Amendment 67 takes a subtler approach. It exempts a narrow group of developers, only those named in the White House digital assets report, while reportedly adding national security obligations elsewhere.
• Criminal Liability for Developers: Senator Van Hollen's Amendments 32 and 33 target developers for code that "facilitates" crimes such as money laundering, unlicensed money transmission, or terrorism financing. The sharpest piece is the "reckless disregard" standard in Amendment 32, which could expose a developer if they allegedly ignored the risk that someone else could misuse their protocol.
• BSA/AML Expansions: CLARITY currently directs Treasury to issue AML and sanctions guidance for U.S.-owned or operated DeFi front ends, while carving out the underlying protocol, nodes, validators, and wallets. Amendments 24, 69, and 92 would expand the federal definition of "financial institution" to cover the entities operating or developing those carved-out components. Amendments 27, 70, 71, and 72 layer new AML and counter-terrorism financing duties onto front ends, covered businesses, and other DeFi entities. In practice, that means wallet screening, transaction monitoring, suspicious activity reporting, customer checks, and compliance certifications for parts of DeFi that don't custody assets or act as traditional intermediaries.
• Sanctions Exposure: Senator Reed's Amendment 89 is a direct response to Van Loon, the Fifth Circuit case involving Tornado Cash. The court held that immutable smart contracts couldn't be sanctioned as property because no one owned or controlled them. Reed's amendment would let the government sanction smart contracts regardless of whether they're autonomous, modifiable, or owned by anyone, reopening the door to Tornado Cash-style enforcement against code with no controlling party.