What is the CLARITY Act? The US Crypto Bill That Could Decide Who Regulates Digital Assets
What is the CLARITY Act? US Crypto Market Structure Bill Explained
The CLARITY Act is a US bill that would create the first full federal rulebook for cryptocurrency markets, splitting oversight mainly between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). It has already passed the House of Representatives and cleared a key Senate committee, but it is not law yet. Here’s what the bill actually does, how it would change crypto regulation in the US, and where it stands as the Senate prepares to take it up again.
Key Takeaways
- The CLARITY Act, formally the Digital Asset Market Clarity Act of 2025 (H.R. 3633), would give the CFTC primary authority over crypto spot markets while the SEC keeps oversight of token sales that work like securities.
- The House passed the bill 294–134 in July 2025. The Senate Banking Committee approved its version 15–9 in May 2026.
- It is still not law. It needs 60 votes on the Senate floor, reconciliation with the House version, and the president’s signature.
- A dispute over ethics rules, including limits on officials profiting from crypto, has been the main obstacle to a Senate floor vote.
- The Senate is expected to take the bill up again the week of September 14, 2026, after missing an August 7 target.
Table of Contents
- What is the CLARITY Act, Exactly?
- Why Congress Wrote the CLARITY Act
- How the CLARITY Act Would Split Regulatory Power
- The Bill’s Core Provisions
- CLARITY Act vs. GENIUS Act
- Where the CLARITY Act Stands: A Timeline
- Why an Ethics Fight Is Holding Up the Vote
- What Happens Next
- What This Means for Crypto Users and Investors
- Final Thoughts
- FAQs
What Exactly is the CLARITY Act?
The CLARITY Act is short for the Digital Asset Market Clarity Act of 2025, a bill tracked in Congress as H.R. 3633. It was introduced on May 29, 2025, by Representative French Hill (R-AR), chair of the House Financial Services Committee, and builds on an earlier proposal known as FIT21.
At its core, the bill answers one question that has confused the US crypto industry for years: which federal agency actually regulates a given digital asset, the SEC or the CFTC? Instead of leaving that decision to lawsuits and case-by-case enforcement, the CLARITY Act would write the answer into law, along with new rules for the exchanges, brokers, and custodians that handle digital assets.
The bill does not touch crypto taxes. It changes who supervises trading, not how gains are reported to tax authorities.
Why Congress Wrote the CLARITY Act
For more than a decade, the SEC treated most tokens as unregistered securities and pursued enforcement actions against exchanges, while the CFTC claimed authority over crypto commodities but had little power over spot markets. Court rulings only ever settled individual cases, not the underlying jurisdictional question.
The result was what critics call “regulation by enforcement”: companies often learned the rules only after being sued. Industry groups argue this pushed crypto businesses offshore. Consumer-advocacy groups and some lawmakers counter that the bill goes too far toward deregulation. Both views resurface in the ethics dispute covered below.
How the CLARITY Act Would Split Regulatory Power
The bill’s central move is dividing digital assets into categories and assigning a regulator to each one.
Regulator | What it would oversee | Example |
|---|---|---|
| CFTC | Spot trading of “digital commodities” — tokens from sufficiently decentralized networks | Established, decentralized cryptocurrencies |
| SEC | Digital assets sold as part of an investment contract, plus ongoing disclosure for issuers | Newly launched tokens tied to a company or project |
| Treasury | Anti-money-laundering and counter-terrorism-financing rules across digital asset markets enforced through FinCEN | Compliance requirements for exchanges and custodians |
A token would not necessarily stay in one bucket forever: the bill includes a path for an asset to move from SEC to CFTC oversight once its network meets a decentralization standard set out in the legislation.
The Bill's Core Provisions
Beyond the SEC/CFTC split, the CLARITY Act would:
- Create legal definitions for terms like “digital asset,” “digital commodity,” and “blockchain” so companies and regulators use consistent language.
- Introduce “restricted digital assets,” a category limiting resale unless specific conditions are met, aimed at curbing unregulated secondary trading of newly issued tokens.
- Set operating rules for trading platforms, including recordkeeping, custody, and disclosure requirements similar to traditional securities markets.
- Establish a registration path for exchanges and brokers under one federal regulator instead of a patchwork of state and federal rules.
- Add consumer protections, such as requiring platforms to segregate customer funds from their own assets.
CLARITY Act vs. GENIUS Act
The CLARITY Act is often confused with the GENIUS Act. The GENIUS Act, already signed into law in July 2025, regulates the issuance of payment stablecoins — dollar-pegged tokens like USDC — including who can issue one and how it must be backed.
The CLARITY Act covers everything else: it decides which federal agency oversees the trading of other digital assets, from Bitcoin to newly launched tokens, rather than regulating stablecoin issuance itself. Supporters describe the two bills as companion pieces covering different parts of the market.
Where the CLARITY Act Stands: A Timeline
- May 29, 2025: Rep. French Hill introduces the CLARITY Act in the House.
- July 17, 2025: The House passes the bill 294–134, with 78 Democrats joining all Republicans, during a legislative push known as “Crypto Week” that also produced the GENIUS Act.
- May 14, 2026: The Senate Banking Committee approves its version 15–9, with two Democrats, Ruben Gallego (D-AZ) and Angela Alsobrooks (D-MD), joining Republicans.
- July 26, 2026: Senate staff release a merged, roughly 600-page draft combining the Banking and Agriculture Committee versions.
- August 7, 2026: A self-imposed deadline for a pre-recess vote passes without action; the Senate leaves for its August recess without voting.
- Early August 2026: Senate Majority Leader John Thune files the procedural motion needed to bring the bill to the floor once the Senate returns.
- September 14, 2026: The Senate reconvenes, with leadership signaling the CLARITY Act will be an early priority.
If the Senate passes its version, it still needs reconciliation with the House text and another vote in both chambers before reaching the president.
Why an Ethics Fight Is Holding Up the Vote
Republicans hold 53 Senate seats, so passing the bill needs 60 votes and at least seven Democratic crossovers. Only two Democrats backed it in committee, and several more have said publicly they oppose the current draft.
The main sticking point is an ethics provision limiting senior officials from profiting off crypto while in office. Recent drafts put enforcement mainly with the Department of Justice, cap fines, and let the provision expire around 2029. Democratic senators, including Elizabeth Warren, argue this leaves gaps, particularly given President Trump’s financial disclosures showing significant crypto-related income in 2025, and want state attorneys general to share enforcement power — a change the White House has so far declined. Some Republican holdouts have raised separate concerns, including how the bill treats bank deposits.
This is a live political dispute, not a settled fact, and its outcome will likely decide whether the bill reaches 60 votes in September.
What Happens Next
Three things still need to happen: the Senate must invoke cloture (60 votes) and pass its version; the Senate and House texts, which are not identical, must be reconciled; and both chambers must approve the final version before it reaches the president.
Industry analysts’ odds on this happening in 2026 have shifted significantly over the summer as the political calendar tightened ahead of the November midterms. These are market-based forecasts, not facts, and can change quickly.
What This Means for Crypto Users and Investors
- Nothing changes yet. The CLARITY Act is not law, so today’s rules, including which agency handles which disputes, remain in effect.
- Watch the September floor vote. A failed cloture vote would likely push any new market-structure law well into 2027 or later.
- Tax treatment is unaffected. The bill does not change how crypto gains, losses, or income are reported.
- Some exchanges are already adjusting listing and disclosure practices in anticipation of eventual passage, though that is a business choice, not a legal requirement yet.
Final Thoughts:
The CLARITY Act would be the most significant US crypto legislation since the GENIUS Act, replacing years of regulation-by-lawsuit with a written framework for who oversees what. It has bipartisan support in principle, but a dispute over ethics enforcement has kept it from a final Senate vote. Whether it becomes law in 2026 now depends on a narrow window in September, before election-season politics take over the calendar.
FAQs
Is the CLARITY Act law yet?
No. As of September 2026, it has passed the House and a Senate committee but not the full Senate, and it hasn’t been reconciled with the House version or signed by the president.
What does “CLARITY” stand for?
Its formal name is the Digital Asset Market Clarity Act of 2025. “CLARITY” is the bill’s short name, not a defined acronym.
How is it different from the GENIUS Act?
The GENIUS Act, already law, regulates stablecoin issuance. The CLARITY Act would decide which regulator, SEC or CFTC, oversees trading of other digital assets.
Will it affect how I pay crypto taxes?
No. It’s a market-structure bill and doesn’t change tax reporting rules.
Why is the Senate vote taking so long?
Mainly a dispute over ethics language limiting officials from profiting off crypto, plus limited floor time and the need for 60 votes.
What happens if it fails in September?
Supporters warn that missing this window could delay comprehensive crypto legislation until after the 2026 midterms, or longer.
Disclaimer
This article is for informational purposes only and does not constitute legal, financial, or investment advice. Legislative details can change as the bill moves through Congress; readers should confirm the current status before making decisions based on it..
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