US Senate Republicans Release Final Draft of the Digital Asset Market Clarity Act (CLARITY Act): The Pros and Cons of Developer Protections and the 2029 Sunset Ethics Provision

On July 22, 2026, US Senate Republicans circulated a definitive 616-page draft of the 'Digital Asset Market Clarity Act (CLARITY Act).' This is interpreted as a final attempt to establish a federal regulatory framework for virtual assets before the congressional recess in August.

This amendment includes a 'Safe Harbor' provision for software developers and solidifies the right to individual self-custody. However, it has drawn sharp criticism from political circles for setting a sunset date of 'January 20, 2029' on ethics regulations that restrict the issuance of digital assets by high-ranking public officials.

The atmosphere in the Senate is tense as the August recess deadline approaches. This draft is considered the final version aimed at passing the Senate after months of deliberation, reflecting the Republican party's determination to resolve regulatory uncertainty.

This draft is the culmination of months of effort by the Senate Banking Committee and is a significant step toward making the United States a hub for virtual assets.

Many of the technical and legal requirements long demanded by the virtual asset industry have been included in this draft. In particular, protection clauses for non-custodial software developers have been strengthened, and a concrete path for tokens to transition from securities to non-securities has been provided through the 'Mature Blockchain Test.'

Legalization of Developer Protection and Self-Custody Rights

Section 604 of the bill, the 'Blockchain Regulatory Certainty Act (BRCA),' provides a clear safe harbor for non-custodial developers. Additionally, Section 605, the 'Keep Your Coins Act,' protects the right of individuals to manage their assets directly through private wallets, a measure that legally guarantees the core principles of the decentralized ecosystem.

• Section 604 (BRCA): Establishing a safe harbor for non-custodial software developers.
• Section 605: Protecting the right of individuals to maintain private wallets and self-custody.
• 2029 Sunset Clause: Limiting the regulation prohibiting public officials from issuing virtual assets until January 20, 2029.
• Mature Blockchain Test: Defining the legal nature of tokens based on the degree of network decentralization.

The most controversial part is the temporary application of ethics regulations for public officials. While it prohibits the President, Vice President, members of Congress, and their spouses from issuing or sponsoring virtual assets, this regulation expires on January 20, 2029. Enforcement authority for this regulation is granted exclusively to the Office of Government Ethics (OGE).

In terms of market structure, the bill clearly separates the authority between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Digital commodity brokers and exchanges must comply with all requirements of the Bank Secrecy Act (BSA), including customer due diligence and suspicious activity reporting, and regulations for protecting customer assets in the event of bankruptcy are also strengthened.

Political Interests and Market Reaction

Despite the inclusion of bipartisan elements such as the Tillis-Alsobrooks compromise, the sunset clause for ethics regulations remains a point of contention. Critics raise suspicions that this provision may be intended for the virtual asset businesses of specific politicians and are demanding the permanence of the regulation.

If this bill is not passed before the August recess, the virtual asset industry will once again face uncertainty. ETF issuers and DeFi protocols are expected to experience significant confusion in budgeting for regulatory compliance and establishing listing strategies, which could also affect overall market investment sentiment.