Clarity Act News: Who’s been blacklisted? How the Senate’s ‘bad actor’ rules could redraw the map of US cryptocurrencies

Blockchain AssociationThe Washington-based cryptocurrency industry trade group was in the news as it held an online town hall meeting Thursday to defend the Digital Asset Market Clarity Act, the Senate cryptocurrency bill commonly referred to as the Cryptocurrency Clarity Act, with a particular focus on the illicit financing provisions of the legislation as the bill’s sponsors vie with less than eight weeks of Senate session time before the House recesses for summer recess and the midterm election cycle begins in earnest.

Senator Cynthia Lummis, Republican of Wyoming and chair of the Senate Banking Committee’s Digital Assets Subcommittee, appeared at the event alongside Patrick Witt, the White House’s senior adviser on cryptocurrencies, to press the case that the bill Bad actor The framework is operationally rigorous and legislatively necessary, describing the current version, recently introduced by the Senate Banking Committee, as “the most complex piece of bipartisan or nonpartisan negotiated digital asset regulatory framework ever presented to the public in this country.”

Did you miss the Tele-Town Hall today?

Watch the replay, which includes statements from @sinlomis, @GOPMajorityWhipand @Patrick Jowettin addition to a discussion on the provisions of the National Clarity and Security Act.

Special thanks to the former Acting Director of FinCEN @m_mosier_…

— Blockchain Association (@BlockchainAssn) June 4, 2026

This is not just a stress event timed according to a slow news cycle. It’s an inflection point in a multi-year legislative effort, as the fine lines of the bad actor exclusion framework determine which companies are allowed to operate within a new federally authorized ecosystem, and which companies are structurally, and perhaps permanently, excluded from it.

The risks are further complicated by the math: The bill requires 60 favorable votes to pass the filibuster threshold in the Senate, and Lummis herself has publicly stated that failure this session would likely mean it won’t be reconsidered until 2030.

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Clarity Act News: The bad actor provision structure, the triggers for disqualification, and the unresolved issue of treatment pathways

It’s old news now that the Digital Asset Market Clarity Act (Clarity Act) traces its direct legislative lineage back to the Lummis-Gillibrand framework that was first introduced in 2022 and substantially revised through 2023, before the House approved its version of the bill on July 17, 2025, largely to resolve a long-running litigation dispute between the SEC and the Commodity Futures Trading Commission over which the agency holds primary authority. Digital asset brokers.

The Senate version, now advanced by the Senate Banking Committee chaired by Tim Scott, retains the basic structure of the House bill, the CFTC’s primary authority over “digital goods,” the SEC’s retention of securities for digital assets, and a “mature blockchain” test that would allow certain networks to move to CFTC oversight only once no single entity controls more than 20% of the supply or governance. With the addition of negotiating language on illicit financing that became a major fault line between Democratic and Republican negotiators.

The mechanism works as follows: The bill includes bad actor screening requirements at multiple registration and exemption stages, for exchanges, brokers, dealers, and token issuers, similar to existing securities law disqualification standards, including certain criminal convictions, SEC or CFTC bars, and fraud provisions.

Commentators tracking the Senate Banking Committee’s section-by-section summary have noted that these hooks can effectively prevent companies implementing major pre-enforcement settlements or injunctions from accessing specific relief regimes, in the absence of a legislatively defined course of action.

In his remarks during Thursday’s event, Senator Lummis emphasized a specific provision: The bill “allows law enforcement to prosecute bad actors who deploy code with the specific intent, and this is key, with the specific intent to use their code to facilitate money laundering,” a formula designed to protect open source developers while still… Enable Prosecute infrastructure that was intentionally created for illegal purposes.

The most commercially relevant question that the current text leaves partly unresolved is whether previous enforcement settlements, of the type entered into by major exchanges like Binance, which reached a landmark $4.3 billion agreement with the US Department of Justice in 2023, constitute permanent disqualification from specific licensing regimes or merely a rebuttable presumption that can be overcome through proven administrative reform, installation of compliance oversight, and regulatory ratification.

Industry lobbyists have lobbied hard for the latter construction, arguing that a strict permanent ban would reward overseas competitors and effectively deny entry to the U.S. market to any company that had the misfortune of operating during the pre-regulatory period that is now being repealed by legislation.

The absence of FTX, whose collapse in 2022 provided the emotional and political impetus for accelerating cryptocurrency regulation, as an operational entity means that the bad actor provisions in the bill now operate less as a response to a specific ongoing threat and more as a structural screen against future counterparts of that collapse.

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