Revised CLARITY Act Would Shift DeFi Compliance to Controllers - Cryptonews

A revised version of the CLARITY Act would place compliance obligations on the "controllers" of decentralized finance protocols rather than on the software or smart contracts themselves, according to Cryptonews. The distinction matters because DeFi applications typically run on autonomous code with no single operator, which has made it difficult for regulators to identify who is legally responsible for a given activity.

Under this approach, parties with meaningful control over a protocol — those able to direct its operation or update its rules — would carry the associated regulatory duties. The framing echoes a broader policy trend of looking past the technology to the people and entities exercising authority over it, an idea that has surfaced in several jurisdictions weighing how to supervise decentralized systems.

For market participants, the key question is how "controller" would be defined in practice. A narrow definition could leave many protocols outside the compliance perimeter; a broad one could capture developers, governance token holders, or front-end operators. The bill's progress through the legislative process, and any amendments clarifying that term, are the developments worth tracking.