Senate negotiations over the CLARITY Act have encountered renewed disagreement after a revised proposal emerged that would weaken safeguards for software developers, prompting Senator Cynthia Lummis to reject the changes.

The dispute reflects a central tension in ongoing congressional efforts to craft digital asset regulation: balancing law enforcement's interest in tools to combat illicit finance against developer concerns that overly broad liability standards could expose individuals who write and publish code to prosecution without proof of criminal intent.

According to journalist Eleanor Terrett, prosecutors' groups submitted the disputed proposal, while the Solana Policy Institute separately urged Senate leadership to schedule a floor vote before the August recess. The timing adds pressure: Congress typically recesses in August, narrowing the legislative window before the fall campaign season.

Lummis Rejects Revised Language

Senator Lummis stated that the latest proposal did not result from any agreement with her office, according to Terrett's reporting. She indicated the measure fails to protect developers while simultaneously falling short of providing law enforcement with practical enforcement tools.

The proposal would remove the Lummis-Grassley amendment from the legislation. That amendment clarified that software developers could face criminal liability only when they specifically intended to facilitate money laundering—a mens rea standard designed to distinguish between developers building tools with legitimate applications and individuals deliberately creating infrastructure for illicit activity.

Terrett also reported that the latest negotiations centered on prosecutors rather than police organizations. Notably, the National Sheriffs' Association, which had previously opposed the CLARITY Act, did not support the proposed revisions removing developer protections. The split among law enforcement groups indicates the debate does not fall cleanly along a law-enforcement-versus-industry line.

White House and Treasury Dispute Proposal

Politico reporter Jasper Goodman reported that two major prosecutors' organizations submitted proposed revisions on the disputed CLARITY Act provision to the White House.

However, Crypto Council Executive Director Patrick Witt rejected claims that the proposal reflected discussions with the administration. He characterized Senator Catherine Cortez Masto's proposal as "not even close" to the White House position.

Terrett further reported that the Treasury Department disputed assertions that the language reflected its input, stating instead that Washington lobbyists produced the proposal. With both the White House and Treasury disavowing the revised language, the proposal lacks clear institutional backing from either body.

Solana Policy Institute Urges Senate Vote

Separately, the Solana Policy Institute sent a July 28 letter to Senate Republican Leader John Thune and Senate Democratic Leader Chuck Schumer. Kristin Smith and Miller Whitehouse-Levine urged leadership to bring the CLARITY Act to the Senate floor before the August recess.

The organization stated that the legislation would establish protections for software developers while providing regulatory certainty for institutions and consumers. It also highlighted developer growth on Solana during 2024 and argued the legislation would give regulators a framework tailored to blockchain-based financial systems while preserving consumer protections.