Senate CLARITY Act Defines Non-Custodial DeFi Protocols as Non-Intermediaries
The Senate substitute for the **Digital Asset Market Clarity Act** establishes a crucial distinction for decentralized finance infrastructure.
**Key Development:**
- Non-custodial protocols that execute on predetermined, on-chain rules are **not classified as intermediaries**
- This definition provides regulatory clarity for DeFi protocols operating autonomously
**Legislative Progress:**
- Senate Banking Committee has advanced the CLARITY Act
- The bill faces ongoing debates around stablecoins, ethics, and illicit finance concerns
This distinction matters because it separates automated, code-based protocols from traditional financial intermediaries that hold customer assets. The classification could allow DeFi protocols to operate without the same regulatory requirements as centralized exchanges or custodial services.