The CLARITY Act, a U.S. cryptocurrency regulation bill, has been fully rewritten in the Senate, and an analysis says its impact on bitcoin is limited, contrary to initial expectations.

Bitcoin Magazine reported on Aug. 14 that contributor Isaiah Austin (이사야 오스틴), after reviewing the latest version clause by clause, said it is hard to view it as a bitcoin-only bill.

The CLARITY Act passed the House in July last year during "Crypto Week" and then sat in the Senate Banking Committee for nearly a year. The amended bill that cleared the committee effectively rewrote the text 100 percent by deleting all 256 pages of the original and inserting new provisions.

■ Legal protection for self-custody rights, immunity for developers, benefits for banks

Section 605 of the revised bill, the Keep Your Coins Act, states that federal regulators cannot restrict self-custody for legitimate purposes. Austin cited a 2020 case in which the Treasury Department sought to impose identity reporting requirements on users of non-custodial wallets, saying this is the first time there would be a legal basis to block such attempts. Section 604 is an immunity provision intended to prevent situations in which developers of non-custodial software are prosecuted as money transmitters, as in the Samourai Wallet and Tornado Cash cases.

Section 401 allows banks and credit unions, without additional approval, to custody digital assets, extend collateralized loans, operate nodes and act as intermediaries. Austin pointed to this provision as the "only bullish factor in terms of price." U.S. commercial banks hold $25.7 trillion in total assets, about 20 times bitcoin's total market capitalisation of $1.3 trillion, meaning even a small inflow of funds could affect the price, the analysis said.

■ No codification of commodity status, no ban on CBDC

Bitcoin's current status as a "commodity" is based only on the Commodity Futures Trading Commission's judgment and case law, and there is no explicit legal provision. The version that passed the House included a clause to codify that status, but it was deleted during the Senate rewrite. A draft dated July 22 included the clause again, but it has not yet been formally introduced. A provision to ban the Federal Reserve from issuing a retail CBDC was also omitted from this revision.

Austin said that even if the law passes, regulators do not start working immediately. He said the earlier stablecoin regulation law, the GENIUS Act, also failed to meet its deadline to draw up detailed rules within 1 year, and that the CFTC currently has only 1 standing commissioner and staffing has fallen 21 percent over the past year.

Austin also concluded that the CLARITY Act is positive for crypto overall but only limitedly supportive for bitcoin, saying most of the bill aims to rescue altcoins facing uncertainty under securities law. He added, "Bitcoin will not boom or bust in Congress."