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. As of February 2026, the bill is stalled in the U.S. Senate amid disagreements over key provisions. It 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) ^{[11] [13]}.

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] [12]}.

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" ^[12].

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 on July 17, 2025, the bill was referred to the Senate Banking Committee on September 18, 2025. Despite initial optimism and predictions of passage by the end of 2025, the legislation's momentum stalled, entering a legislative "logjam" in early 2026. A planned executive session by the Senate Banking Committee to mark up the bill, scheduled for January 15, 2026, was officially postponed. The primary reason for the stalemate is a significant dispute over the regulation of "yield" or interest-like rewards on stablecoins ^[14]. In an effort to break the deadlock, the White House, through its Cryptocurrency Committee, initiated a series of closed-door mediation meetings in February 2026 between stakeholders from the traditional banking and cryptocurrency industries. An initial exploratory meeting was held on February 2, 2026, and a second, higher-stakes negotiation is scheduled for February 10, 2026, with reports indicating the White House is pushing for a compromise by the end of the month to prevent the bill from losing legislative traction ^[13].

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 ^{[11] [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] [11]}.

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. Additionally, the House-passed version of the bill includes language affirming a consumer's right to maintain their own hardware or software wallets for self-custody and to conduct direct peer-to-peer transactions ^{[1] [11] [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 would encourage greater institutional adoption and investment ^[4].

However, the bill has also faced opposition, particularly from some Democratic lawmakers and, more recently, from the traditional banking sector, which has become the central hurdle to the bill's progress in the Senate. The primary conflict revolves around yield-bearing stablecoins. The banking industry views these products as an "existential threat" that could create an "unregulated parallel banking" system. They warn that the higher returns offered by stablecoins (~3.5%) compared to average bank deposits (~0.1%) could lead to massive capital flight from traditional banks, potentially destabilizing the U.S. economy. This concern was reportedly amplified by a U.S. Treasury scenario analysis estimating a potential deposit drawdown of $6.6 trillion ^{[13] [14]}.

Conversely, the crypto industry argues that a prohibition on stablecoin interest would stifle financial innovation, limit consumer choice, and damage America's competitive position in decentralized finance. They frame these returns as "rewards" or loyalty benefits rather than interest. High-level meetings between lawmakers and crypto executives from firms like Coinbase, Ripple, Kraken, and a16z have continued in an effort to find a path forward for legislation ^{[13] [10]}. Democratic lawmakers have also raised separate concerns. Maxine Waters, a top Democrat in the House Financial Services Committee, described the CLARITY Act as a "rushed, overly complicated bill" that would exempt "some of the riskiest activities" in crypto and legitimize what she called "Trump’s crypto con" ^[3].

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, which is expected to encourage greater participation from institutional investors ^[4].

However, the path from legislation to implemented rules is long. Even if a bill is signed into law, the process of federal agencies writing the specific regulations the industry must follow can take years. 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 ^{[8] [12]}. The EU's MiCA framework provides a direct precedent for the current U.S. debate, as it restricts issuers of certain stablecoins from offering interest-like benefits. This has had real-world consequences; Coinbase, for instance, was forced to halt its USDC rewards program in MiCA-compliant regions. U.S. lawmakers now face a decision between a more restrictive model similar to the EU's or a more permissive one that could be seen as more competitive for the crypto industry. The fate of the CLARITY Act now hinges on whether a compromise on this issue can be reached in the White House-led negotiations, with one potential outcome being a framework that permits activity-based rewards (e.g., for payments or card usage) but not passive, balance-based returns ^[14].