Senate CLARITY Act draft adds asset freezes without warrant (up to 180 days), stablecoin seizure/reissue authority, expanded DeFi website surveillance duties, and removes CBDC ban.
Regulation & Gov ·
A new 616-page Senate CLARITY Act draft circulated July 22 has expanded regulatory power over cryptocurrency and digital assets substantially beyond prior versions, with a regulatory severity score rising from 72 to 83. The revised bill deletes the House-passed central bank digital currency ban while introducing mechanisms for asset seizure without judicial oversight—including authority to freeze funds for up to 180 days based on a written request from any law enforcement agency, with no warrant or judge required, and immunizing the freezing entity from lawsuits even when acting on its own reasonable suspicion.
Additional provisions grant stablecoin issuers power to seize, freeze, or burn payment stablecoins and reissue replacements under lawful orders. The bill expands Bank Secrecy Act surveillance duties to decentralized finance websites even where underlying protocols are exempt, and adds a new PATRIOT Act special measure specifically targeting digital asset transmittals. Exchanges continue to operate as de facto surveillance offices, with authority to share customer records with foreign central banks and foreign ministries.
Key uncertainties remain around implementation timelines and enforcement priorities, as the substitute had not been formally filed and floor consideration was expected the week of July 27. The degree to which financial institutions will interpret "reasonable suspicion" standards and how self-hosted wallet regulations will take final form in any enacted legislation have not been clarified.