Category: Regulatory Clarity and Compliance 

The CLARITY Act: Bringing Regulatory Clarity to the U.S. Crypto Market

The Digital Asset Market Clarity Act of 2025, commonly known as the CLARITY Act (H.R. 3633), is a landmark bipartisan bill aimed at establishing a comprehensive regulatory framework for digital assets in the United States.




The Digital Asset Market Clarity Act of 2025, commonly known as the CLARITY Act (H.R. 3633), is a landmark bipartisan bill aimed at establishing a comprehensive regulatory framework for digital assets in the United States.

Passed by the House on July 17, 2025, by a vote of 294 to 134, it delineates jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), prioritizes consumer protection, and fosters innovation in crypto markets.5 As of January 15, 2026, the Senate Banking Committee is marking up the bill, amid debates over its investor safeguards and potential risks.[2]

This legislation addresses long-standing uncertainties in crypto regulation by classifying digital assets into categories like digital commodities and permitted payment stablecoins, while introducing registration requirements for exchanges, brokers, and dealers. It builds on prior efforts like the Genius Act for stablecoins and responds to calls for clarity from industry stakeholders.2[4]

Legislative Background and Path to Passage

The CLARITY Act emerged from years of regulatory ambiguity in the U.S. crypto space, where overlapping SEC and CFTC jurisdictions led to enforcement actions and market confusion. Introduced in the 119th Congress, it supersedes earlier proposals like the 2022 RFIA, focusing specifically on market structure rather than broad stablecoin regulation.

Key Milestones:
June 23, 2025: House Financial Services and Agriculture Committees advanced the bill after markup sessions.[1] July 17, 2025: House passage with strong bipartisan support (294-134), sending it to the Senate.
January 15, 2026**: Senate Banking Committee markup, incorporating House text as a base while addressing concerns from figures like former SEC Chief Accountant Lynn Turner.

Proponents, including Republican leaders, argue it replaces “uncertainty with clarity,” assigns roles appropriately, and includes joint SEC-CFTC coordination with enhanced disclosure and anti-fraud powers.[2] Critics, however, warn it could enable fraud akin to FTX without stronger audits and state oversight.

Globally, the bill aligns with trends toward regulatory clarity, as seen in Singapore, UAE, Hong Kong, and Europe’s stablecoin rules, positioning the U.S. for leadership in digital assets.

Core Definitions: Digital Commodities and Related Terms

At its heart, the CLARITY Act redefines digital assets to escape the binary “security or commodity” trap. It introduces precise terms grounded in functionality rather than labels.

Digital Commodity: A native asset intrinsically linked to a mature blockchain system (detailed in Sec. 205). These are not investment contracts but functional tokens used for payments, incentives, or network operations.5 Examples include units removed from circulation for fees, used in mining/staking, or distributed proportionally to existing holders.

Key Exclusions and Permissions:
Offers or sales of rights to future digital commodity issuance are regulated, with prohibitions on evasion via IP transfers.

Activities like mining, validating, or staking are exempt if tied directly to blockchain operations.

Permitted Payment Stablecoins: Treated separately under Sec. 301, these gain anti-fraud protections but tie into the Genius Act’s framework, requiring audits—though critics note PCAOB oversight gaps.

Network Token: A subset of digital commodities linked to distributed ledger systems, deriving value from decentralization.

Digital Commodity Exchanges, Brokers, Dealers: New registrants under CFTC for spot markets.

These definitions aim to protect self-custody and software developers not controlling funds, while mandating risk management for DeFi-interfacing intermediaries.

Jurisdictional Division: CFTC Takes the Lead on Spot Markets

A pivotal shift grants the CFTC exclusive jurisdiction over digital commodity spot markets, while the SEC retains authority over investment contract assets.[1] This amends the Commodity Exchange Act (CEA) to fold digital commodities into existing CFTC rules.

Implications:
Commodity Pools Expansion: Extends CFTC oversight to spot digital asset activities, potentially requiring registration for funds, treasury operations, and advisors

Registration Regime: Digital commodity exchanges, brokers, and dealers must register with the CFTC, mirroring traditional commodity markets.

SEC Role: Limited to securities-like assets; joint coordination ensures no gaps.

This structure prioritizes “consumer protection while fostering innovation,” per bill authors, reinforcing U.S. global leadership.

Key Provisions: A Section-by-Section Breakdown

The bill’s text (H.R. 3633, engrossed July 17, 2025) outlines a structured regime.

Title II: Offers and Sales (Secs. 204-206)

Sec. 204 – Requirements for Digital Commodity Related Persons:
Regulates offers/sales by issuers, affiliates, and related persons.
Prohibits evasion tactics, like IP shuffling to avoid issuer status.[5]

Sec. 205 – Mature Blockchain System Requirements:
Defines “mature” systems with decentralization metrics, ensuring tokens aren’t centralized securities.5

Sec. 206 – Effective Date: Phased implementation to allow compliance ramps.

Title III: Treatment and Protections (Secs. 301-302)

Sec. 301 – Treatment of Digital Commodities and Stablecoins:
Integrates into CEA; clarifies non-security status for qualifying assets.[5]

Sec. 302 – Anti-Fraud Authority:
Empowers CFTC/SEC against fraud in stablecoins and commodity transactions.[5]

Additional Features:
DeFi Clarity: Protects non-custodial protocols; requires centralized intermediaries to manage DeFi risks.[2] Illicit Finance Framework: Described as Congress’s strongest yet, with sanctions clarity.

Regulation Crypto: Proposed SEC rules under preserved state anti-fraud authority (debated).

Consumer Protections and Anti-Fraud Measures

Supporters highlight “strong safeguards,” including disclosure mandates, anti-fraud expansion, and risk standards for DeFi gateways.2 The bill preserves self-custody and developer protections, countering fears of overreach.

Criticisms from Experts:
Lynn Turner (Ex-SEC Accountant): Bill is “severely deficient,” risking “another FTX” due to weak audits. Genius Act audits lack PCAOB inspections, eroding trust.

NASAA (State Regulators): Urges preserving flexible “investment contract” definitions; opposes narrowing SEC rulemaking. Calls for NSMIA-style state savings clauses for anti-fraud, fees, and enforcement.

Concerns: Definitional contradictions (e.g., network tokens) could hinder scam prosecutions.
Recommendations: Treat digital assets as federally covered securities with state powers intact; strike SEC text weakening contracts.

These views underscore tensions between innovation and enforcement.

Implications for Industry Stakeholders

Investment Funds and Treasuries: CFTC commodity pool rules could mandate registrations, curbing “digital asset treasury companies.”

DeFi and Developers: Relief for non-custodials; burdens for centralized players interfacing with protocols.

Stablecoin Issuers: Builds on Genius Act but faces audit scrutiny.

Broader Markets: Enables scalability, tokenization of assets (funds, bonds, real estate), and enterprise blockchain adoption.[4] Interoperability, global coordination, and public-private ties are emphasized for responsible growth.

Investment Funds and Treasuries: CFTC commodity pool rules could mandate registrations, curbing “digital asset treasury companies.”

Potential Impacts on Crypto Markets and Innovation

If enacted, the CLARITY Act could catalyze U.S. crypto growth by providing “long-overdue certainty.”

Positive Effects:
Increased adoption via clarity, mirroring global trends.[4]
Liquidity boosts from on-chain assets.

U.S. leadership, attracting firms wary of enforcement risks.

Risks and Debates:
Weaker protections might invite fraud, per critics.

State-federal balance: NASAA pushes for robust anti-fraud preservation.

Global Context: Aligns with 2026’s “inflection point” for digital assets, emphasizing regulation as an adoption accelerator.

Criticisms and Proposed Amendments

Opposition centers on protections:

NASAA’s Six Key Concerns/Improvements:
Preserve broad investment contract definitions for enforcement.
Add anti-fraud savings clauses (e.g., Sec. 108).
Import NSMIA model for state authority.
Ensure Regulation Crypto respects states.
Strike SEC powers to narrow contracts.
Reinforce state roles amid scam surges.

Turner echoes audit needs, noting Genius Act loopholes destroy confidence.

Supporter Rebuttals: Myth-vs-Fact sheets claim strongest illicit finance tools ever, with proper jurisdiction.

What’s Next? Senate Outlook and Beyond

With Senate markup underway, amendments could address critiques. Passage would mark a “defining moment” for 2026 digital assets. Failure risks prolonged uncertainty.

Watch Areas:
Stablecoin audit fixes.
State authority clauses.
DeFi fine-tuning.

In summary, the CLARITY Act offers a balanced path forward, weighing innovation against risks—its fate hinges on Senate refinements.

The Digital Asset Market Clarity Act of 2025, commonly known as the CLARITY Act (H.R. 3633), is a landmark bipartisan bill aimed at establishing a comprehensive regulatory framework for digital assets in the United States.

Passed by the House on July 17, 2025, by a vote of 294 to 134, it delineates jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), prioritizes consumer protection, and fosters innovation in crypto markets.5 As of January 15, 2026, the Senate Banking Committee is marking up the bill, amid debates over its investor safeguards and potential risks.[2]

This legislation addresses long-standing uncertainties in crypto regulation by classifying digital assets into categories like digital commodities and permitted payment stablecoins, while introducing registration requirements for exchanges, brokers, and dealers. It builds on prior efforts like the Genius Act for stablecoins and responds to calls for clarity from industry stakeholders.2[4]

Legislative Background and Path to Passage

The CLARITY Act emerged from years of regulatory ambiguity in the U.S. crypto space, where overlapping SEC and CFTC jurisdictions led to enforcement actions and market confusion. Introduced in the 119th Congress, it supersedes earlier proposals like the 2022 RFIA, focusing specifically on market structure rather than broad stablecoin regulation.

Key Milestones:
June 23, 2025: House Financial Services and Agriculture Committees advanced the bill after markup sessions.[1] July 17, 2025: House passage with strong bipartisan support (294-134), sending it to the Senate.
January 15, 2026**: Senate Banking Committee markup, incorporating House text as a base while addressing concerns from figures like former SEC Chief Accountant Lynn Turner.

Proponents, including Republican leaders, argue it replaces “uncertainty with clarity,” assigns roles appropriately, and includes joint SEC-CFTC coordination with enhanced disclosure and anti-fraud powers.[2] Critics, however, warn it could enable fraud akin to FTX without stronger audits and state oversight.

Globally, the bill aligns with trends toward regulatory clarity, as seen in Singapore, UAE, Hong Kong, and Europe’s stablecoin rules, positioning the U.S. for leadership in digital assets.

Core Definitions: Digital Commodities and Related Terms

At its heart, the CLARITY Act redefines digital assets to escape the binary “security or commodity” trap. It introduces precise terms grounded in functionality rather than labels.

Digital Commodity: A native asset intrinsically linked to a mature blockchain system (detailed in Sec. 205). These are not investment contracts but functional tokens used for payments, incentives, or network operations.5 Examples include units removed from circulation for fees, used in mining/staking, or distributed proportionally to existing holders.

Key Exclusions and Permissions:
Offers or sales of rights to future digital commodity issuance are regulated, with prohibitions on evasion via IP transfers.

Activities like mining, validating, or staking are exempt if tied directly to blockchain operations.

Permitted Payment Stablecoins: Treated separately under Sec. 301, these gain anti-fraud protections but tie into the Genius Act’s framework, requiring audits—though critics note PCAOB oversight gaps.

Network Token: A subset of digital commodities linked to distributed ledger systems, deriving value from decentralization.

Digital Commodity Exchanges, Brokers, Dealers: New registrants under CFTC for spot markets.

These definitions aim to protect self-custody and software developers not controlling funds, while mandating risk management for DeFi-interfacing intermediaries.

Jurisdictional Division: CFTC Takes the Lead on Spot Markets

A pivotal shift grants the CFTC exclusive jurisdiction over digital commodity spot markets, while the SEC retains authority over investment contract assets.[1] This amends the Commodity Exchange Act (CEA) to fold digital commodities into existing CFTC rules.

Implications:
Commodity Pools Expansion: Extends CFTC oversight to spot digital asset activities, potentially requiring registration for funds, treasury operations, and advisors

Registration Regime: Digital commodity exchanges, brokers, and dealers must register with the CFTC, mirroring traditional commodity markets.

SEC Role: Limited to securities-like assets; joint coordination ensures no gaps.

This structure prioritizes “consumer protection while fostering innovation,” per bill authors, reinforcing U.S. global leadership.

Key Provisions: A Section-by-Section Breakdown

The bill’s text (H.R. 3633, engrossed July 17, 2025) outlines a structured regime.

Title II: Offers and Sales (Secs. 204-206)

Sec. 204 – Requirements for Digital Commodity Related Persons:
Regulates offers/sales by issuers, affiliates, and related persons.
Prohibits evasion tactics, like IP shuffling to avoid issuer status.[5]

Sec. 205 – Mature Blockchain System Requirements:
Defines “mature” systems with decentralization metrics, ensuring tokens aren’t centralized securities.5

Sec. 206 – Effective Date: Phased implementation to allow compliance ramps.

Title III: Treatment and Protections (Secs. 301-302)

Sec. 301 – Treatment of Digital Commodities and Stablecoins:
Integrates into CEA; clarifies non-security status for qualifying assets.[5]

Sec. 302 – Anti-Fraud Authority:
Empowers CFTC/SEC against fraud in stablecoins and commodity transactions.[5]

Additional Features:
DeFi Clarity: Protects non-custodial protocols; requires centralized intermediaries to manage DeFi risks.[2] Illicit Finance Framework: Described as Congress’s strongest yet, with sanctions clarity.

Regulation Crypto: Proposed SEC rules under preserved state anti-fraud authority (debated).

Consumer Protections and Anti-Fraud Measures

Supporters highlight “strong safeguards,” including disclosure mandates, anti-fraud expansion, and risk standards for DeFi gateways.2 The bill preserves self-custody and developer protections, countering fears of overreach.

Criticisms from Experts:
Lynn Turner (Ex-SEC Accountant): Bill is “severely deficient,” risking “another FTX” due to weak audits. Genius Act audits lack PCAOB inspections, eroding trust.

NASAA (State Regulators): Urges preserving flexible “investment contract” definitions; opposes narrowing SEC rulemaking. Calls for NSMIA-style state savings clauses for anti-fraud, fees, and enforcement.

Concerns: Definitional contradictions (e.g., network tokens) could hinder scam prosecutions.
Recommendations: Treat digital assets as federally covered securities with state powers intact; strike SEC text weakening contracts.

These views underscore tensions between innovation and enforcement.

Implications for Industry Stakeholders

Investment Funds and Treasuries: CFTC commodity pool rules could mandate registrations, curbing “digital asset treasury companies.”

DeFi and Developers: Relief for non-custodials; burdens for centralized players interfacing with protocols.

Stablecoin Issuers: Builds on Genius Act but faces audit scrutiny.

Broader Markets: Enables scalability, tokenization of assets (funds, bonds, real estate), and enterprise blockchain adoption.[4] Interoperability, global coordination, and public-private ties are emphasized for responsible growth.

Investment Funds and Treasuries: CFTC commodity pool rules could mandate registrations, curbing “digital asset treasury companies.”

Potential Impacts on Crypto Markets and Innovation

If enacted, the CLARITY Act could catalyze U.S. crypto growth by providing “long-overdue certainty.”

Positive Effects:
Increased adoption via clarity, mirroring global trends.[4]
Liquidity boosts from on-chain assets.

U.S. leadership, attracting firms wary of enforcement risks.

Risks and Debates:
Weaker protections might invite fraud, per critics.

State-federal balance: NASAA pushes for robust anti-fraud preservation.

Global Context: Aligns with 2026’s “inflection point” for digital assets, emphasizing regulation as an adoption accelerator.

Criticisms and Proposed Amendments

Opposition centers on protections:

NASAA’s Six Key Concerns/Improvements:
Preserve broad investment contract definitions for enforcement.
Add anti-fraud savings clauses (e.g., Sec. 108).
Import NSMIA model for state authority.
Ensure Regulation Crypto respects states.
Strike SEC powers to narrow contracts.
Reinforce state roles amid scam surges.

Turner echoes audit needs, noting Genius Act loopholes destroy confidence.

Supporter Rebuttals: Myth-vs-Fact sheets claim strongest illicit finance tools ever, with proper jurisdiction.

What’s Next? Senate Outlook and Beyond

With Senate markup underway, amendments could address critiques. Passage would mark a “defining moment” for 2026 digital assets. Failure risks prolonged uncertainty.

Watch Areas:
Stablecoin audit fixes.
State authority clauses.
DeFi fine-tuning.

In summary, the CLARITY Act offers a balanced path forward, weighing innovation against risks—its fate hinges on Senate refinements.

Regulatory Clarity and Compliance 

If you’ve followed crypto for a while, you’ve probably heard the word “regulation” thrown around a lot. It can sound scary or complex, but regulatory clarity is really about making the crypto space safer and more predictable for everyday users, businesses, and investors. In 2025, that clarity is evolving in big ways across regions like the European Union, the United States, the United Kingdom, and beyond. Here’s a plain-English guide to what’s happening, why it matters, and what you can do about it.

1) What “Regulatory Clarity” Means

Clear rules of the road: Regulators decide how crypto assets are classified and treated for tax, securities law, anti-money laundering (AML), and consumer protection. This helps businesses know what they can and can’t do.

Consistent standards: Across borders, different countries may have similar goals but different rules. Clarity often means harmonizing or aligning standards so global projects don’t face conflicting requirements.

Compliance as a feature: For many users, regulatory compliance isn’t just a burden. It can be a feature that reduces risk, makes institutions more willing to work with crypto, and improves investor protection.

2) Key Areas Regulators Are Focusing On

Classification: Are a particular token a security, a commodity, a currency, or something else? This impacts how it’s regulated and taxed.

Exchange licensing: Crypto exchanges may need licenses to operate, protect customer funds, and implement KYC (Know Your Customer) and AML checks.

Stablecoins and payments: Stablecoins—cryptos pegged to a fiat currency—are under extra scrutiny because they can affect financial stability, settlement times, and customer protections.

DeFi and custody: Decentralized finance (DeFi) platforms and custody services (where you store your keys) face questions about transparency, consumer protection, and what “compliance” looks like in a decentralized environment.

Tax treatment: Governments want to know how to tax crypto gains, losses, and income. Clear guidance helps investors avoid surprises at tax time.

Consumer protection: Rules around fraud prevention, disclosure, and dispute resolution help protect users from scams and hacks.

3) Why This Matters to Everyday Users

Fewer scams and more trust: When there are rules that require exchanges to verify users and secure funds, you’re less likely to be scammed or to lose money due to poor security.

Easier access to services: Clear licenses and compliance processes make it more likely for traditional financial institutions to partner with crypto companies, which can lead to seamless onramps and offramps (buying crypto with fiat, or moving crypto to your bank).

Better protection for institutions: If custody and security standards are clear, more banks and funds feel comfortable offering crypto products, which can increase liquidity and options for you.

Predictable costs and rules: When rules are stable, projects can plan longer-term, which helps with innovation and, ideally, lower costs over time.

4) Practical Ways to Stay Ahead

Follow regulator updates in your region: For the EU, watch MiCA (Markets in Crypto-Assets) developments. In the U.S., keep an eye on SEC and CFTC statements and any administration guidelines. The UK often updates its Financial Conduct Authority (FCA) rules. Subscribing to official regulatory bulletins or reputable crypto policy newsletters can help.

Look for licensed players: If you’re using exchanges or wallets, check their regulatory status and whether they hold appropriate licenses. This can be a signal of custodial security and consumer protections.

Keep tax basics in mind: Record your crypto transactions, understand how your jurisdiction treats capital gains, and know what counts as a taxable event. A simple accounting habit now can save headaches later.

Practice good security habits: Even with clear rules, security is still on you. Use hardware wallets for long-term storage, enable two-factor authentication, and be cautious about phishing attempts.

5) The Big Picture for 2025

More predictable market: As jurisdictions publish and refine guidelines, the market tends to become steadier. That draws more institutions into crypto and can reduce price-swing volatility driven by regulatory uncertainty.

Greater interoperability: With consistent principles across regions, cross-border crypto use (payments, settlements) becomes easier and cheaper.

Innovation with guardrails: Innovation (DeFi, tokenized assets, new financial primitives) can continue, but with built-in protections that reduce systemic risk.

6) Quick Takeaways

Regulatory clarity is about safer, more predictable crypto experiences.

Key focus areas: classification, exchange licensing, stablecoins, DeFi, custody, and tax treatment.

Stay informed, choose regulated providers, and maintain good security hygiene.