How the CLARITY Act Could Change Crypto Trading and Issuance

This article was first published on Deythere.

The new crypto CLARITY Act has become one of the most important pieces of legislation for the digital asset industry in the United States. After years of regulatory uncertainty during which both the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission claimed jurisdiction over digital assets, the CLARITY Act has come to clarify who is responsible for regulating digital assets, exchanges and markets. 

The bill passed the House of Representatives in July and is now under consideration in the Senate, but its journey has been closely watched, debated, and even stalled as critics from across the industry have pushed back against it. 

Defining Digital Assets and  Regulatory Authority

The goal of the crypto CLARITY Act is to resolve the long-running dispute over which regulators have jurisdiction across digital markets. Digital assets are ranked in accordance with their functions under the proposed law. 

One of such terms used in the Act is “digital commodities,” which are referred to as assets that derive their value from the use of a blockchain. 

These would typically fall under the jurisdiction of the CFTC,  especially for spot and secondary markets trading. 

This is a sharp break from more than a decade of ‘regulation by enforcement’ in which financial regulators especially the SEC, used existing securities laws to pursue cases against digital asset projects through litigation rather than clear rules. 

Under the CLARITY Act’s model, the CFTC would be the primary regulator for exchanges and brokers or dealers in digital commodities transactions requiring registration, monitoring, and compliance standards similar to traditional futures markets. 

That would leave primary offerings, disclosure requirements, investor protection and initial sales that look like securities as the domain of the S.E.C. 

This dual regime system is designed to disentangle the trading markets from initial issuance and sales regulation so that each agency can concentrate on what it does best. 

Mature Blockchains and Regulatory Relief Criteria

An interesting concept in the Act is the concept of “mature blockchains.” According to the written summary of the bill, a mature blockchain system is one in which neither the network nor its associated digital commodity are controlled by any single person or group;  a standard metric for measuring decentralization. 

If a blockchain satisfies these conditions, its native digital asset might be eligible for lighter regulatory treatment and the possibility of exemption from some SEC registration requirements.

This provision provides a road to a more stable regulatory footing as projects mature in terms of decentralization and usage, one of the primary widespread complaints in the industry being that unclear legal status ultimately drives innovation underground. 

It is in the same vein that these criteria also try to differentiate between truly decentralized networks and ones that may still have centralized control or governance. 

Stablecoins, Disclosures, and Complementary Laws

Although the CLARITY Act does not rewrite stablecoin law, it is complementary to and builds on the GENIUS Act introduced earlier last year which created a federal framework for payment stablecoins. 

Under the GENIUS Act, stablecoins that comply with reserve, redemption and regulatory oversight requirements would no longer be defined as securities or commodities,  a principle the CLARITY Act expands on. 

Under the CLARITY Act, stablecoin activities are still regulated under the GENIUS Act but related disclosures including (and especially) those associated with rewards or yield features, fall within the CLARITY Act’s required reporting regime. 

There are also standardized disclosures from issuers and developers regarding technical information, token economics, and risks in the bill, to harmonize expectations across markets.

These rules are intended to help investors and other market participants access information about digital assets in a more streamlined manner. This would replace years of inconsistent enforcement actions with predictable regulatory requirements. 

Current Legislative Position and Industry Disagreement

The crypto CLARITY Act is currently working its way through the Senate as of this January. After passing the House, it went to the Senate Banking, Housing and Urban Affairs Committee, but it faces delays in scheduling a markup, as well as pushback from some in the crypto industry, particularly after reported changes in the Senate draft that inspired Coinbase to withdraw its support. 

Industry sentiment is mixed. Some of its proponents view the bill as a long-overdue move toward legal certainty that could draw institutional capital and mainstream acceptance, while critics argue that parts of the bill could impose undue compliance requirements or affect decentralized finance models. 

The delay spells out the tension as Lawmakers want to achieve a workable balance between clarity and oversight on one hand and space for innovation on the other, yet they remain divided over what that balance should look like. 

Senate Republicans are still working on the bill text, and there are likely to be amendments ahead of a full committee vote. 

Depending on the result, the decision could determine whether the United States finally embraces a unified federal system, or keeps going with enforcement-driven route that has governed crypto for years. 

Conclusion: Why the CLARITY Act Is Relevant Today

The Crypto CLARITY Act aims to offer organized oversight with regulatory boundaries that show how markets work, and should end years of doubt over what powers an agency has,  particularly between the SEC and the CFTC.

By defining digital securities, establishing blockchain standards, and standardizing disclosure requirements in legislation, the bill seeks to replace uncertainty with predictability. 

Its progress in the Senate, though slow and delayed, could be a sign that American lawmakers are serious about setting up a long-term framework for crypto markets. 

The precise language in the final legislation and how it is applied will impact investment, innovation, and adoption over the coming years. 

Glossary

Crypto CLARITY Act: the Digital Asset Market Clarity Act of 2025, which is a proposed U.S. legislation detailing clear regulatory roles, digital assets definition and allocation of oversight responsibility between the SEC and CFTC.

Digital commodity: a digital asset whose value is derived predominantly from the use of its blockchain, under the CLARITY Act’s definition.

Mature blockchain: refers to the blockchain system possessing no single dominant controller, making its native assets eligible for some regulatory exemption.

CFTC:  the abbreviation for Commodity Futures Trading Commission, a U.S. regulator suggested to regulate spot trading of digital goods under the Act.

SEC: the U.S. Securities and Exchange Commission, which will still have control over initial offerings and disclosures.

Frequently Asked Questions About Crypto CLARITY Act

What is in the crypto CLARITY Act?

It is a proposed U.S. federal legislation (H.R. 3633) designed to split regulatory authority of digital assets amongst SEC and CFTC, and establish uniform rules for exchanges, intermediaries and disclosures. 

What is a digital commodity as defined in the Act?

Digital commodities are a type of asset that derive value primarily from the use of the blockchain system, but excluding securities, stablecoins, and derivative contracts. 

Which agencies would have jurisdiction over the crypto markets?

Digital commodity transactions would be regulated by the CFTC, and initial offerings, disclosures and investor protections would fall under the oversight of the S.E.C. 

Is the Clarity Act now law?

As of January 2026, the Act has been approved by the House of Representatives and is awaiting further action in the Senate, where it awaits further action 

Why is regulatory clarity important for crypto?

Clear regulatory guidelines help companies to know what is expected, minimize legal risk and encourage institutional as well as mainstream participation in the crypto markets.

References

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