The CLARITY Act, formally the Digital Asset Market Clarity Act of 2025, is a federal bill that would set the rules of the road for cryptocurrency in the United States by splitting oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. It sorts digital assets into three buckets — securities, commodities, and stablecoins — and assigns each to a regulator. The House passed the bill (H.R. 3633) on July 17, 2025, by a vote of 294 to 134, and the Senate is still working on its version.1Congress.gov. H.R. 3633 All Actions2EY Tax News. House Passes Crypto Market Structure Framework
Until now, no single federal agency has held general authority over spot trading in digital assets that are not securities. The Financial Stability Oversight Council flagged that gap, and the CLARITY Act is Congress’s most advanced attempt to close it.3Every CRS Report. Digital Asset Market Clarity Act of 2025
How the Bill Classifies a Digital Asset
Everything else in the CLARITY Act flows from three categories.
- Digital commodities are assets “intrinsically linked to a blockchain system” whose value ties to that system’s operation, functionality, or services like payments, governance, or access. Derivatives, securities, and stablecoins are explicitly excluded.4Arnold & Porter. Clarifying the Clarity Act
- Investment contract assets are digital commodities sold as part of an investment contract, typically a capital raise. They are treated as securities during the initial offering, but that status is temporary: once the asset is resold on the secondary market, it generally becomes a digital commodity.4Arnold & Porter. Clarifying the Clarity Act
- Permitted payment stablecoins are dollar- or currency-denominated tokens used for payment or settlement, with an obligation to redeem at a fixed value. They are governed by the GENIUS Act framework, signed into law on July 18, 2025.5PwC. Digital Asset Regulation: GENIUS and Clarity Acts
An earlier House bill, FIT21, decided which agency regulated a token by asking whether the project was “decentralized.” The CLARITY Act shifts the test to whether a blockchain is “controlled by any person or group of persons under common control,” and it separates the investment contract used to sell a token from the token itself.6Cato Institute. Crypto Market Structure: Focus on the Clarity Act
Who Regulates What
The CFTC gets exclusive authority over anti-fraud and anti-manipulation enforcement for digital commodities, including spot and cash transactions. Exchanges, brokers, and dealers that handle digital commodities have to register with the CFTC.4Arnold & Porter. Clarifying the Clarity Act
The SEC keeps exclusive authority over the issuance and registration of investment contract assets. It also keeps anti-fraud and anti-manipulation power over digital commodities when they trade on SEC-registered venues such as alternative trading systems or national securities exchanges.4Arnold & Porter. Clarifying the Clarity Act
Stablecoins largely fall outside securities regulation. The SEC retains limited anti-fraud authority over stablecoin trades on its registered platforms, and the CFTC has the same for its own registered entities. Prudential oversight of stablecoin issuers sits with banking regulators under the GENIUS Act.7House Financial Services Committee. Section-by-Section Summary of the CLARITY Act of 2025
The Path from Security to Commodity
A signature feature of the bill is the “asset maturity path.” An issuer can notify the SEC that a digital asset is, or will be within four years, “functionally mature” or “sufficiently decentralized.” Once the blockchain is certified as mature, the token is no longer a security and the issuer faces lighter filing obligations. If the issuer misses the deadline, the SEC is directed to impose penalties.3Every CRS Report. Digital Asset Market Clarity Act of 2025
The bill also creates a new Securities Act exemption letting digital commodity issuers offer up to $75 million in assets in any 12-month period, loosely modeled on Regulation A. Issuers have to make initial and ongoing disclosures covering token economics, source code, risk factors, and maturity status, and the SEC has one year after enactment to write the rules.3Every CRS Report. Digital Asset Market Clarity Act of 2025 Unlike FIT21, the CLARITY Act drops the earlier cap that would have limited purchases to 10 percent of an investor’s annual income or net worth, opening these offerings to all retail investors.8Morgan Lewis. Bipartisan Majorities Advance the Digital Asset Market Clarity Act of 2025
What Changes for People Who Hold Crypto
The bill imposes a detailed consumer-protection regime on digital commodity exchanges, brokers, and dealers. Customer assets must sit with a “qualified digital asset custodian” — an entity regulated by a federal, state, or foreign authority and supervised for custodial activity.7House Financial Services Committee. Section-by-Section Summary of the CLARITY Act of 2025 Custodians have to segregate customer holdings from their own and from other customers’; commingling is restricted unless explicitly authorized under clearly disclosed conditions. Rehypothecation — reusing customer assets — is prohibited without explicit customer approval.9Loeb & Loeb. The Clarity Act: Key Developments for Digital Assets
Registered exchanges, brokers, and dealers become “financial institutions” under the Bank Secrecy Act. That means anti-money laundering programs, transaction recordkeeping, suspicious activity reporting, and customer identification programs. Platforms that offer services like staking must get written opt-in from customers, and they cannot condition trading access on participating.7House Financial Services Committee. Section-by-Section Summary of the CLARITY Act of 2025
The SEC must write rules within 270 days of enactment requiring clear written disclosures about what happens to customer assets if a broker or dealer becomes insolvent.10Senate Banking Committee. Section-by-Section Summary The bill also explicitly preserves the right to self-custody digital assets.11Senate Banking Committee. The Facts: The Clarity Act
Rules for Developers and DeFi
The CLARITY Act treats decentralized finance differently from centralized exchanges. Several activities tied to running a blockchain or decentralized protocol are excluded from SEC registration: providing computational work, offering user interfaces, and developing or distributing blockchain software or decentralized messaging systems. The SEC and CFTC still hold anti-fraud and anti-manipulation authority over those activities, but cannot force the participants to register.12WilmerHale. Congress Set to Bring Clarity to Digital Asset Market Structure
Software developers who do not control customer funds are shielded from being classified as money transmitters under the Bank Secrecy Act, through a provision known as the Blockchain Regulatory Certainty Act (Section 604). A voluntary program at the National Institute of Standards and Technology would evaluate DeFi projects against cybersecurity standards; compliant projects can display a NIST seal, and federal agencies are told to treat participation as evidence of good-faith compliance.10Senate Banking Committee. Section-by-Section Summary
Who Supports and Who Opposes It
Coinbase, Circle, Ripple, and venture firm Andreessen Horowitz have backed the bill as the regulatory predictability the industry has been asking for.13CNBC. Clarity Act Congress Crypto Senate The Trump administration issued a Statement of Administration Policy in support on July 15, 2025,14GovTrack. H.R. 3633: Digital Asset Market Clarity Act and Senate Banking Committee Chairman Tim Scott said the bill fixes an environment where “developers, entrepreneurs and investors were left with uncertainty” and faced “confusion and enforcement actions” rather than clear rules.
Consumer groups have pushed back hard. The National Consumer Law Center, joined by 82 other organizations, said in July 2025 that the bill “weakens the enforcement powers of federal financial regulators,” “undermines state regulators’ ability to protect consumers,” and “legitimizes risky and exploitative crypto industry practices.”15National Consumer Law Center. Letter Opposing Clarity Act
Major unions weighed in against the bill in a May 2026 letter to senators. The AFL-CIO, SEIU, the American Federation of Teachers, the National Education Association, and AFSCME wrote that it “jeopardizes the stability of workers’ retirement plans, including public pensions, and introduces significant volatility to retirement savings accounts.”16CNBC. Congress Crypto Legislation Labor Unions The AFL-CIO argued the bill contains a loophole letting companies put stock on a blockchain to sidestep securities disclosures that pension funds rely on.17AFL-CIO. Letter Opposing Legislation That Poses Risks to Retirement Funds
Law enforcement groups, including the National District Attorneys’ Association, the National Sheriffs’ Association, and the National Association of Assistant U.S. Attorneys, oppose the Section 604 developer exemption. The district attorneys’ association said the provision “would severely impede the ability of law enforcement and prosecutors to investigate, trace, and prosecute criminal activity.” Senator Catherine Cortez Masto of Nevada said the bill “undermines law enforcement’s ability to trace illicit finance and recover victims’ money.”18The Hill. Clarity Act Senate Challenges
State securities regulators have their own concerns. The North American Securities Administrators Association objects to language that would give the SEC new discretionary power to designate “federally covered securities” through rulemaking, which NASAA warns could displace state registration authority across all securities markets, not just crypto. NASAA also says narrowing the “investment contract” test by rulemaking could weaken the primary tool states use against pyramid schemes, Ponzi schemes, and other investment frauds.19NASAA. NASAA Urges Congress to Make Targeted Improvements Six banking trade groups have separately argued that without stricter limits on stablecoin rewards, stablecoins could “draw away bank deposits and threaten local lending and economic activity across the country.”18The Hill. Clarity Act Senate Challenges
Where the Bill Stands
After House passage in July 2025, the Senate has been working on two tracks. The Senate Banking Committee, under Chairman Tim Scott, released a 278-page substitute on January 12, 2026, folding in ideas from the earlier Lummis-Gillibrand Responsible Financial Innovation Act.20Senate Banking Committee. Digital Asset Market Clarity Act Draft The Senate Agriculture Committee advanced a companion bill, the Digital Commodity Intermediaries Act, on January 29, 2026, focused on how the CFTC would regulate digital commodity intermediaries.21Senate Agriculture Committee. Boozman Leads Ag Committee in Advancing Crypto Market Structure Legislation
On May 14, 2026, the Senate Banking Committee voted 15 to 9 to advance its amended version, with Senators Angela Alsobrooks of Maryland and Ruben Gallego of Arizona crossing over.22American Bankers Association Banking Journal. Senate Banking Committee Advances Clarity Act The substitute added a prohibition on paying interest or yield “solely for holding payment stablecoins” (activity-based rewards are still allowed), added titles on illicit finance and digital asset kiosks, and dropped ethics provisions from earlier drafts to keep bipartisan support.23Davis Wright Tremaine. Senate Banking Crypto Market Structure Bill Gallego and other Democrats have said they still want stronger ethics guardrails on how government officials can invest in the industry they regulate.18The Hill. Clarity Act Senate Challenges
As of June 1, 2026, the bill sits on the Senate Legislative Calendar under General Orders and is eligible for floor action.1Congress.gov. H.R. 3633 All Actions Before it can reach the president, the Banking Committee’s version and the Agriculture Committee’s companion bill have to be reconciled into one Senate bill, and that Senate bill then has to be reconciled with the House-passed version.24Latham & Watkins. US Crypto Policy Tracker: Legislative Developments Until that happens, the CLARITY Act is a bill, not a law, and none of its provisions are in effect.