Senate Banking Chair Releases Amended Version of "Digital Asset Market Clarity Act"

Senate Banking Committee Chair Tim Scott released a bipartisan amendment, "in the nature of a substitute" to improve the "Digital Asset Market Clarity Act," a bill to establish a comprehensive regulatory framework for digital assets.

The bipartisan amendment introduces new concepts such as "ancillary assets," directs the SEC and CFTC to create a limited "Regulation Crypto" exemption, and draws clearer jurisdictional lines around digital asset activities, including banking, stablecoins, DeFi protocols, NFTs, and self-custody. In doing so, the amendment aims to replace uncertainty and enforcement-driven policy with defined rules that balance innovation, consumer protection, and national security.

The amendment follows months of negotiations between Senate Republicans and Democrats and builds upon previous discussion drafts and industry feedback.

The draft bill would, among other things:

• define "ancillary assets" as network tokens whose value depends on managerial efforts, and establish a presumption that such assets are not securities if issuers comply with specific disclosure and certification requirements;
• direct the SEC and CFTC to promulgate "Regulation Crypto," an exemption allowing issuers to raise up to $50 million annually (with a $200 million aggregate cap) through the sale of ancillary assets without full securities registration;
• apply Bank Secrecy Act ("BSA") and anti-money laundering obligations to digital commodity brokers, dealers, and exchanges, and establish strict registration and reporting requirements for digital asset kiosks;
• permit financial institutions, including national banks and credit unions, to engage in digital asset activities—such as custody, lending, and payments—and clarify that payment stablecoin issuers may not pay interest directly, though third-party rewards programs are permitted;
• establish a "CFTC-SEC Micro-Innovation Sandbox" to allow eligible firms to test innovative financial products under regulatory oversight, and mandate a joint study on the regulatory treatment of tokenized real-world assets;
• create a safe harbor for "nonfungible tokens" (NFTs) to ensure they are not treated as securities solely based on their method of transfer, provided they are not marketed as investment contracts;
• prohibit federal agencies from restricting the ability of individuals to maintain self-hosted wallets and conduct lawful transactions (the "Keep Your Coins Act");
• distinguish between "decentralized" and "non-decentralized" finance protocols, applying securities and BSA requirements only to protocols controlled by a centralized person or group; and
• protect software developers and non-controlling network participants from being treated as money transmitters or financial institutions solely for publishing code or supporting network operations.