What the CLARITY Act is actually trying to clarify about crypto markets

Key takeaways

• The CLARITY Act aims to address years of regulatory uncertainty with a structured framework that clearly defines digital assets, intermediary roles and disclosure obligations.

• It places most spot trading of eligible tokens under CFTC oversight, while keeping the SEC responsible for primary offerings, disclosures, and investor protection.

• The bill focuses on regulating activities as well as assets, setting registration and conduct standards for exchanges, brokers and dealers to strengthen market integrity and transparency.

• The GENIUS Act governs stablecoins, while the CLARITY Act only applies in complementary areas, such as disclosures and any features related to rewards related to the use of stablecoins.

The Digital Asset Market Clarity Act of 2025 (CLARITY) aims to break the industry’s legislative logjam through a two-pronged approach that defines what digital assets are and delegates oversight based on how they operate in the marketplace. The legislation goes beyond one-off enforcement and instead provides a comprehensive framework for asset classification, intermediary roles and mandatory disclosures.

This article explains what the CLARITY Act is and why it matters, describes its goals, and examines how it proposes to govern stablecoins. It also covers the concept of mature blockchains, the main arguments against the CLARITY Act, and its current legislative status.

Why the CLARITY Act is important

The CLARITY Act addresses a long-standing problem in crypto: regulatory uncertainty.

For several years, digital asset companies have faced a confusing overlap between the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC). The SEC often treats many tokens as securities, while the CFTC classifies them as commodities. This ambiguity has slowed innovation, complicated compliance, frustrated investors, and created confusion for crypto companies.

The CLARITY Act aims to resolve this logjam by establishing clear definitions of digital assets and assigning regulatory responsibilities based on the type of asset and activity involved. A predefined framework allows market participants to understand the applicable rules from the outset rather than facing the uncertainty caused by coercive measures.

Main objectives of the CLARITY law

The bill uses three main approaches to establish the related regulatory infrastructure:

Define asset classes more precisely

The CLARITY Act introduces the term “digital commodity,” which refers to a digital asset whose value derives primarily from the use of the blockchain system associated with it. This definition excludes traditional securities and stablecoins. As a result, spot trading of many eligible tokens would fall under the jurisdiction of the CFTC. Recognizing the practical challenges facing crypto networks, the definition emphasizes blockchain functionality and sufficient decentralization.

Clarifying regulatory jurisdiction

The law divides surveillance by function:

• The CFTC gains primary authority over digital commodity transactions, particularly in secondary and spot markets and trading platforms.

• The SEC retains authority over primary offerings, investor protection, required disclosures and initial sales.

The bill also encourages joint rulemaking in overlapping areas such as disclosures.

Establish consistent information and rules of conduct

To protect investors and support fair markets, the legislation requires standardized disclosures from sponsors and issuers. These would cover the technical details of blockchain, token economics and key risks, giving market participants comparable information to evaluate projects. Intermediaries such as digital commodity exchanges, brokers and dealers would be subject to registration, reporting and monitoring requirements, largely overseen by the CFTC for trade-related activities.

Overall, the CLARITY Act aims to replace regulatory gray areas with clear guidelines, supporting innovation while preserving investor protections and market integrity.

Did you know? Debates over crypto market structure influence how policymakers approach the regulation of AI models, as both involve unclear accountability and rapid innovation cycles.

How the CLARITY Act treats stablecoins

The GENIUS Act, signed into law in 2025, established a federal framework specifically for payment stablecoins. It excludes eligible stablecoins from classification as securities or commodities, provided they meet strict reserve, redemption and monitoring requirements.

The CLARITY Act does not replace or duplicate this stablecoin regime. Instead, its provisions apply in a complementary manner, including with respect to stablecoin rewards, associated disclosures, and their interaction with broader digital asset markets.

The concept of “mature” blockchains

With a mechanism for assets to evolve, the CLARITY Act defines a pathway by which a blockchain can achieve “mature” status by meeting decentralization and other functional criteria.

Once these criteria are met, the associated token is treated as a digital product under the supervision of the CFTC. This can significantly reduce regulatory requirements, such as registration, provided the project meets other applicable conditions.

The concept of mature blockchains reflects the idea that regulatory treatment should adapt as networks become more decentralized and more widely distributed. It provides projects with a clearer progression toward lighter compliance requirements.

Did you know? In past regulatory disputes, courts have sometimes relied on decades-old investment records to evaluate crypto tokens, highlighting how existing legal frameworks are stretched to accommodate entirely new digital markets.

Persistent criticism of the CLARITY Act

Although the bill promises clarity, skepticism remains. Critics argue that its definitions can leave gaps, particularly in the area of ​​decentralized finance (DeFi), where projects often do not fit neatly into traditional regulatory models.

Others argue that investor protections do not meet established securities standards. Other concerns center around potential overlaps, such as how the SEC’s antifraud authority would apply in areas where the CFTC has primary jurisdiction, particularly for tokens with hybrid characteristics.

Legislative Status of the CLARITY Act

The U.S. House of Representatives passed the CLARITY Act (HR 3633) in July 2025 with bipartisan support. As of January 2026, the bill has been awaiting passage in the U.S. Senate, where it has been referred to the Senate Banking, Housing, and Urban Affairs Committee. The legislative process also involves input from the Senate Agriculture, Nutrition, and Forestry Committee on issues related to CFTC oversight.

Since January 2026, Senate committees have held hearings, released discussion drafts, proposed amendments, and advanced versions of broader market structure legislation. However, the markups were delayed and revised amid debates over issues such as stable coin yields and investor protection. Reconciliation between the Senate plans and the House-passed bill continues, with no final Senate vote yet.

If enacted in compatible form, the CLARITY Act would represent the first comprehensive U.S. federal framework for digital asset market structure.

Did you know? Some blockchain networks now publish real-time transparency dashboards that show validator concentration, token velocity, and governance participation. Regulators sometimes refer to these metrics when considering whether a network is “sufficiently decentralized.”

Evaluation of the CLARITY bill

At its core, the CLARITY Act addresses a persistent challenge in crypto: unclear regulatory boundaries that deter innovation and encourage reactive enforcement rather than proactive compliance.

The law establishes defined asset classes, requires consistent disclosures, and assigns distinct roles to the SEC and CFTC. Its aim is to create a more predictable environment in which market participants understand the applicable rules from the outset.

However, legislation is only a starting point. Implementation, rulemaking, and potential adjustments will determine the actual impact of the CLARITY Act. Whether this ultimately delivers the promised clarity will shape U.S. crypto policy and competitiveness for years to come.