Digital Asset Market Clarity Act of 2025 (CLARITY Act), formally titled the Crypto Legal Accountability, Registration, and Transparency for Investors Act, is a proposed United States federal law that passed the House of Representatives and is aimed at establishing a regulatory framework for digital assets by clarifying the jurisdiction of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) ^[14].

The bill seeks to provide regulatory certainty for the digital asset market, particularly by defining which digital assets are considered "digital commodities" and thus fall under the CFTC's purview, while leaving digital assets deemed securities under the SEC's authority ^{[1] [3]}.

Overview

The CLARITY Act, introduced in the 119th Congress as H.R.3633, addresses the long-standing debate in the United States regarding the regulatory classification of digital assets. Currently, both the SEC and the CFTC have asserted jurisdiction over various aspects of the digital asset market, leading to regulatory uncertainty often described as "regulation by enforcement" by industry participants ^{[1] [2]}.

The bill proposes a framework where digital assets intrinsically linked to a blockchain system, with value derived from the system's use, would generally be classified as "digital commodities" regulated by the CFTC. This classification would exclude traditional securities, certain derivatives, stablecoins, banking deposits, and non-commodity assets like NFTs ^{[1] [8]}. Proponents argue that this clarity is essential for fostering innovation, protecting consumers, and preventing the U.S. from falling behind other jurisdictions in the digital asset space. Bill Hughes, senior counsel at Consensys Software, stated that while the CLARITY Act is not perfect, it significantly improves the status quo and is the bill Congress must pass to establish the U.S. as a global leader in digital asset regulation. He emphasized that the bill encourages a shift from blackbox intermediaries to transparent computer networks, which would make markets fairer, more transparent, and more secure, and would also bolster the SEC and CFTC by providing them with a clearer statutory landscape for regulation ^[5]. Opponents have raised concerns about potential loopholes and the impact on investor protection, with some Democratic lawmakers describing it as a "rushed, overly complicated bill" that could exempt "some of the riskiest activities" in crypto ^[3].

The legislation aims to provide clear rules for digital asset exchanges, brokers, and dealers, requiring them to register with either the SEC or the CFTC based on the nature of the assets they handle. It also introduces a concept of "mature blockchain systems" and outlines requirements for initial offerings and secondary market transactions of digital commodities that may have initially involved investment contracts ^[1].

History

The Digital Asset Market Clarity Act of 2025 (H.R.3633) was introduced in the U.S. House of Representatives on May 29, 2025, by Representative J. French Hill [R-AR-2] and several co-sponsors from both Republican and Democratic parties. The bill was referred to the House Committee on Financial Services and the House Committee on Agriculture. Both committees held meetings and reported the bill with amendments on June 23, 2025 ^[1]. The US House of Representatives passed the CLARITY Act on Thursday, July 17, 2025, in a bipartisan vote of 294-134, as a comprehensive market structure bill aimed at ending years of regulatory uncertainty around digital assets ^{[6] [7] [15]}.

In a September 2025 op-ed, House Financial Services Committee Chairman French Hill stated that with the passage of the CLARITY Act and the enactment of the GENIUS Act, "the United States has reversed its hostile approach to the digital asset ecosystem." He argued that the U.S. must establish its own clear regulatory framework to avoid ceding ground to regions like Latin America, which has seen grassroots adoption for payments and savings, and Europe, which has implemented the comprehensive Markets in Crypto-Assets (MiCA) regulation. Hill stressed the urgency, stating, "We must keep pace with the rest of the globe by enacting digital asset market structure by the end of the year" ^[15].

The bill's progression occurred within a period of increased focus on cryptocurrency regulation in the U.S. Congress. Republican House leaders had designated the week of July 14, 2025, as "Crypto Week" to consider several digital asset-related bills, including the CLARITY Act, the Anti-CBDC Surveillance State Act, and the GENIUS Act concerning stablecoins ^[3].

Following its passage in the House, the bill's momentum slowed as it entered the Senate. By September 2025, it was reported that influential lawmakers in the Senate Banking and Agriculture Committees were pushing for revisions, with some seeking stricter investor protections and others favoring broader jurisdiction for the CFTC. Senate staff began drafting a competing framework, raising the possibility that the final legislation might merge elements from both chambers or be renamed entirely ^[14]. This led some policy analysts to suggest that the House-passed CLARITY Act was "probably dead" and that the Senate's version, once finalized, would likely become the primary vehicle for any comprehensive crypto law ^[9].

Despite this, key industry figures remained optimistic about the CLARITY Act's principles moving forward. After meetings in Washington D.C. in mid-September, Coinbase CEO Brian Armstrong stated he had "never been more bullish" on a market structure bill passing, calling it a "freight train leaving the station" due to strong bipartisan support he witnessed in the Senate ^{[10] [11]}. Senator Cynthia Lummis also predicted that a market structure bill would reach President Donald Trump's desk for signature before the end of 2025 ^{[10] [12]}.

Leading crypto trade groups, including the Blockchain Association, The Digital Chamber, and the Crypto Council for Innovation, actively lobbied for the passage of the CLARITY Act, sending a joint letter to House leadership on July 11, 2025, urging its advancement ^[2]. Conversely, some Democratic lawmakers, such as Maxine Waters and Stephen Lynch, announced an "Anti-Crypto Corruption Week" in opposition to the Republican legislative push, raising concerns about the industry's influence and potential risks ^[2].

Key Provisions

The CLARITY Act introduces several key provisions aimed at establishing a comprehensive regulatory framework for digital assets in the United States. The bill amends foundational statutes like the Securities Act, the Securities Exchange Act, and the Commodity Exchange Act to codify its new framework ^[8].

Digital Asset Classification

A core component of the bill is the creation of a functional framework for classifying digital assets to determine regulatory oversight. The legislation would create statutory definitions for different classes of digital assets, distinguishing between digital commodities, digital securities, and payment tokens ^{[14] [8]}.

• Digital Assets: Defined broadly as natively electronic assets issued and transferred using distributed ledger technology, representing value, rights, or access ^[8].
• Digital Commodities: These are digital assets that are part of a decentralized system and do not confer rights to profits, governance, or financial claims against an issuer. Bitcoin and Ethereum are commonly cited examples. These assets would fall under the jurisdiction of the CFTC ^[8].
• Restricted Digital Assets: These are digital assets that function as investment contracts or provide financial rights, such as a claim on a company's profits. These assets would remain under the jurisdiction of the SEC ^[8].
• Permitted Payment Stablecoins: Fiat-redeemable digital assets designed for payments. These would be primarily regulated under the framework of the GENIUS Act, with potential joint oversight from the SEC and CFTC ^[8].

The bill also establishes a certification pathway for issuers to get a formal determination from the SEC or CFTC on their asset's classification, as well as a safe harbor for assets issued before the Act's enactment ^[8].

Regulatory Framework for Digital Commodities (CFTC)

Title II and Title IV of the Act establish the CFTC's authority over the digital commodity spot market ^[8].

• Registration of Intermediaries: Digital commodity brokers, dealers, and trading facilities would be required to register with the CFTC. These platforms must adhere to standards for asset segregation, fair trading, anti-manipulation, AML/KYC programs, price transparency, and cybersecurity ^[8].
• Exempt Offering for Issuers: The Act introduces an exempt offering regime allowing digital commodity issuers to raise up to $75 million annually without full securities registration. This exemption is contingent on meeting detailed disclosure requirements and being tied to a blockchain system that is "mature" or expected to become mature within four years ^[8].

Regulatory Framework for Restricted Digital Assets (SEC)

Title III of the Act confirms the SEC's existing authority over digital assets that are deemed securities ^[8].

• Intermediary Registration: Brokers, dealers, alternative trading systems (ATSs), and clearing agencies that handle Restricted Digital Assets must register with the SEC under the Securities Exchange Act of 1934 and comply with existing rules for customer protection, market integrity, and disclosure ^[8].
• Issuer Compliance: Issuers of Restricted Digital Assets must comply with the registration requirements of the Securities Act unless they qualify for an existing exemption. The CLARITY Act does not create a new exempt offering pathway for these security-like assets, but it does direct the SEC to establish a new registration framework tailored for digital asset issuers and mandates enhanced disclosure standards for crypto exchanges ^{[8] [14]}.

Other Provisions

• Mature Blockchain Systems: The legislation introduces the concept of a "mature blockchain system," defined as a blockchain system and its related digital commodity not controlled by any single person or group under common control. The bill outlines criteria for a blockchain system to be deemed mature and establishes a process for certification with the SEC ^[1].
• Custody of Digital Assets: The Act includes provisions related to the custody of digital assets by registered entities, requiring the use of "qualified digital asset custodians" and outlining standards for such custodians. It also calls for federal custody and safeguarding rules to protect consumer assets held on trading platforms, provisions lawmakers believe could have prevented major collapses like FTX in 2022 ^{[1] [14]}.
• Decentralized Finance: The bill includes provisions to exclude certain decentralized finance activities from being subject to the Act's registration requirements, focusing on activities like compiling transactions, providing computational work, or developing software, while retaining anti-fraud and anti-manipulation authorities ^[1].
• Implementation and Studies: The bill directs the SEC and CFTC to issue final rules within 270 days of enactment. It also mandates various studies on topics such as DeFi, NFTs, financial literacy, and illicit finance ^{[1] [8]}.

Regulatory Jurisdiction

A central tenet of the CLARITY Act is the division of regulatory authority over digital assets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The bill aims to provide a clearer distinction than currently exists, where both agencies have asserted jurisdiction, leading to overlapping oversight and enforcement actions.

Under the proposed framework, digital assets that meet the definition of a "digital commodity" would primarily fall under the regulatory purview of the CFTC. This includes establishing registration requirements and core principles for digital commodity exchanges, brokers, and dealers. The CFTC would have exclusive jurisdiction over cash or spot market transactions in digital commodities conducted on or through registered entities ^[1].

The SEC would retain jurisdiction over digital assets that qualify as securities under existing securities laws. This includes investment contracts involving digital commodities, particularly during the initial offering phase before a blockchain system is deemed "mature" ^[1]. The bill also grants the SEC anti-fraud and anti-manipulation authority over permitted payment stablecoins and certain digital commodity transactions when brokered, traded, or custodied by SEC-registered entities like brokers, dealers, or alternative trading systems ^[1].

The Act requires the SEC and CFTC to engage in joint rulemakings on various aspects, including further defining key terms, handling mixed digital asset transactions (those involving both a digital commodity and a security), and establishing procedures for delisting assets if their trading is deemed inconsistent with regulations ^[1]. A memorandum of understanding between the two agencies is also mandated to ensure consistent requirements and avoid duplicative supervision for entities registered with both commissions or notice-registered with the CFTC while primarily regulated by the SEC ^[1].

Industry Support and Opposition

The CLARITY Act has garnered significant support from various participants in the cryptocurrency industry. Leading crypto trade associations, including the Blockchain Association, the Chamber of Digital Commerce, the Crypto Council for Innovation, and Coinbase's lobbying arm, Stand With Crypto, have actively advocated for the bill's passage. They argue that the legislation provides much-needed regulatory certainty, which is crucial for fostering innovation and enabling the digital asset industry to thrive in the United States ^{[2] [3]}.

Industry proponents believe that a clear legal framework, particularly one that designates most digital assets as commodities under the CFTC's jurisdiction, would encourage greater institutional adoption and investment. Mark Palmer, an analyst at Benchmark investment firm, suggested that the CLARITY Act could boost institutional crypto adoption by 50% due to the regulatory clarity it would provide ^[4]. The current lack of clarity and the SEC's approach of "regulation by enforcement" are seen as hindering growth and pushing businesses to more crypto-friendly jurisdictions abroad ^[3]. The Blockchain Association and Chamber of Digital Commerce urged Congress to move quickly on the legislation. Kristin Smith, CEO of the Blockchain Association, warned that "Without clear federal rules, the U.S. risks ceding leadership in digital finance to Europe and Asia" ^[14]. In September 2025, high-level meetings between lawmakers and crypto executives from firms like Coinbase, Ripple, Kraken, Circle, Cardano, a16z, and Paradigm underscored the industry's continued push for legislation ^{[10] [11] [12]}. The roundtable discussions focused on refining the draft language of the bill to create a unified set of rules for the market ^[13]. Kraken co-CEO Arjun Sethi emphasized that discussions should focus on protecting the right to build a wide range of crypto products and ensuring incentives remain with builders ^{[10] [12]}. Similarly, Cardano founder Charles Hoskinson, who was directly involved in the talks, described the meeting as fruitful, stating that "great progress is being made on bipartisan legislation being passed this year" and praised the contributions from Ripple and a16z ^[13].

However, the bill has also faced opposition, particularly from some Democratic lawmakers. Maxine Waters, a top Democrat in the House Financial Services Committee, stated at a hearing in early June that the CLARITY Act was a "rushed, overly complicated bill" that would exempt "some of the riskiest activities" in crypto. She also expressed concerns that the legislation could be "legitimizing Trump’s crypto con," pointing to the Trump family’s growing net worth from their crypto ventures ^[3]. Stephen Lynch, another Democratic lawmaker, also voiced opposition, stating that Republican colleagues were "eager to continue doing the bidding for the crypto industry while conveniently ignoring the vulnerabilities and opportunities for abuse that exist in crypto" ^[2]. Other critics worried the bill could entrench the dominance of large incumbents by imposing heavy compliance costs on startups, while some consumer advocacy groups argued it did not go far enough on anti-money laundering and fraud prevention ^[14].

Potential Impact

The potential impact of the CLARITY Act, or a successor bill emerging from the Senate, is significant for the digital asset market in the United States. If enacted, the legislation would fundamentally alter the regulatory landscape by providing a statutory definition for "digital commodity" and delineating the roles of the SEC and CFTC ^{[2] [3]}.

One of the primary anticipated impacts is increased regulatory certainty. By clarifying which assets fall under which regulator's authority, the bill aims to reduce the ambiguity that has characterized the U.S. approach to digital asset regulation. This clarity is expected to encourage greater participation from institutional investors, such as asset management companies, hedge funds, and banks, who have often been hesitant to engage deeply with the market due to legal uncertainties. Analysts like Mark Palmer of Benchmark investment firm, suggest that this could lead to a substantial increase in institutional adoption, potentially boosting it by 50% ^[4].

However, the path from legislation to implemented rules is long. Even if a bill is signed into law by the end of 2025, the process of federal agencies writing the specific regulations the industry must follow can take years. This rulemaking process involves public comment periods and can be complex, especially for a new regulatory field. The implementation of the Dodd-Frank Act of 2010, for example, has seen some core aspects still not finalized over a decade later. It is likely that the earliest U.S. crypto firms would see final, enforceable regulations would be deep into 2026, with compliance windows extending even further ^[9].

The passage of a comprehensive framework would also align the U.S. with other major jurisdictions that have already implemented dedicated crypto-asset regulations, such as the European Union's Markets in Crypto-Assets Regulation (MiCA), Japan, Singapore, and South Korea. This could help maintain the U.S.'s competitiveness in the global digital asset landscape ^{[8] [15]}.

Critics worry that shifting significant oversight to the CFTC, which traditionally regulates derivatives markets and has a smaller budget and different mandate than the SEC, might lead to less stringent investor protection for assets that retail investors might perceive as investments. The carve-outs for certain DeFi activities have also raised questions about potential regulatory gaps in that rapidly evolving sector. The effectiveness of the bill would also depend heavily on the joint rulemakings and coordination between the SEC and CFTC during the implementation phase ^[3].