CLARITY Act

What is the CLARITY Act?

The Digital Asset Market Clarity Act of 2025, commonly referred to as the CLARITY Act (H.R. 3633), is a piece of federal legislation designed to establish a comprehensive regulatory framework for digital assets in the United States. Its primary goal is to provide legal certainty by clearly dividing oversight responsibilities between the two main financial regulators: the Securities and Exchange Commission (SEC)—the agency responsible for protecting investors and maintaining fair markets—and the Commodity Futures Trading Commission (CFTC)—the agency that oversees markets for commodities like gold, oil, and wheat.

How the Regulatory Split Works

The CLARITY Act creates a clear boundary based on the nature of the digital asset. The CFTC is granted exclusive jurisdiction over spot or cash markets for “digital commodities.” These are defined as digital assets whose value is derived from the use of a functional blockchain. Conversely, the SEC retains authority over assets classified as securities, investment contracts, and any digital commodity activities that take place on platforms registered with the SEC.

Worked Example: Classifying a Token

To understand how this works in practice, consider a hypothetical digital token, “BlockCoin.” If BlockCoin is used primarily to power a decentralized application on a functional blockchain, it would likely be categorized as a digital commodity. Under the CLARITY Act, the trading of this token on a spot market would fall under the jurisdiction of the CFTC. However, if the developers of BlockCoin offered the token to investors as part of a fundraising effort that promised future profits based on the developers’ work, the SEC would likely classify that specific offering as a security, bringing it under their regulatory purview.

Relationship to the GENIUS Act

The CLARITY Act does not operate in a vacuum; it is designed to work alongside the GENIUS Act, which was enacted in July 2025. While the CLARITY Act focuses on the broader market for digital assets, the GENIUS Act serves as the specific governing law for payment stablecoins—digital assets designed to maintain a stable value, often pegged to a fiat currency like the U.S. dollar. The CLARITY Act builds upon this foundation, ensuring that stablecoins remain a distinct category within the broader regulatory landscape.

Key Provisions

Beyond the jurisdictional split, the legislation includes several notable measures:

• Ancillary Asset Exemption: It provides an exemption from SEC registration for certain asset raises, allowing developers to raise up to $50 million annually for four years, capped at $200 million in gross proceeds.
• Government Ethics: A specific title bars government officials from issuing digital assets while in public service, a rule set to sunset in early 2029.
• Crypto ATM Regulation: The bill establishes a federal floor for the regulation of cryptocurrency automated teller machines.
• Developer Protections: It exempts blockchain developers from being classified as money transmitters, a designation that typically carries heavy compliance burdens.
• Federal Preemption: The act prevents individual states from imposing their own regulations on digital commodities, including those under state securities laws.

Legislative History

The CLARITY Act moved through several stages of the legislative process. After passing the House of Representatives in July 2025, it advanced through the Senate Banking Committee in May 2026 with bipartisan support. The bill was placed on the Senate Calendar, and a cloture motion—a procedural step to end debate and bring the bill to a vote—was filed in August 2026. Under Senate rules, cloture requires 60 votes to advance.

Why It Matters

The CLARITY Act represents a significant attempt to resolve long-standing confusion regarding which federal agency oversees different types of digital assets. By clarifying the taxonomy of these assets—a process informed by a 2026 joint interpretive release from the SEC and CFTC—the bill aims to foster innovation while providing necessary investor protections. It serves as a foundational framework for defining the regulatory boundaries within the United States digital asset industry.