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The Digital Asset Market Clarity Act — formally the Digital Asset Market Clarity Act of 2025, known as the CLARITY Act — is the most comprehensive piece of crypto regulation ever to pass one chamber of the United States Congress. It passed the House of Representatives on July 17, 2025, with a 294-134 vote. It has not passed the Senate.
What the bill does, who opposes it, why it has stalled, and what happens next are questions this article answers in full.
The problem the CLARITY Act is trying to solve
For most of the past decade, the United States regulated crypto through enforcement rather than legislation. When the Securities and Exchange Commission (SEC) wanted to act against a crypto company, it filed a lawsuit and argued that whatever asset was involved qualified as a security under laws written in the 1930s. When companies asked the SEC for clear rules, the agency told them to register — without providing a registration pathway designed for digital assets.
The result was a market that operated in permanent legal uncertainty. Companies did not know whether their token was a security or a commodity. Exchanges did not know which regulator they answered to. Institutional investors who wanted predictable compliance frameworks stayed out of markets where the rules could change through litigation rather than legislation.
The CLARITY Act is designed to end that uncertainty by writing the rules into law.
What the bill actually does
The CLARITY Act does six things that matter.
First, it classifies digital assets into three categories. Securities fall under SEC jurisdiction as they do today. Digital commodities — defined as digital assets intrinsically linked to a blockchain whose value derives from the use of that blockchain — fall under the Commodity Futures Trading Commission (CFTC) jurisdiction. Stablecoins are treated as a separate category under shared SEC and CFTC oversight. The classification question, which has defined years of regulatory litigation, gets a statutory answer.
Second, it gives the CFTC exclusive regulatory jurisdiction over spot and cash markets for digital commodities. This is a significant expansion of CFTC authority. The CFTC currently has anti-fraud and anti-manipulation authority over commodity spot markets but not comprehensive oversight. Under the CLARITY Act, digital commodity exchanges, brokers, and dealers all register with and answer to the CFTC.
Third, it creates a provisional registration regime. Companies that register during an initial 180-day window operate under provisional status while the CFTC finalises its rules. During provisional status, they must protect customer assets and allow the CFTC access to their books and records. The provisional registration authority sunsets after four years.
Fourth, it protects decentralised finance. Validating transactions, running nodes, and other activities that do not involve controlling customer funds are explicitly excluded from the bill's requirements. Centralised intermediaries that interact with DeFi protocols, however, are subject to risk management, cybersecurity, and compliance standards tailored to their level of control.
Fifth, it creates a new capital-raising pathway for digital asset projects. Current securities law was not written for blockchain-based fundraising. The bill introduces a disclosure regime tailored to the specific risks of digital commodities and gives projects a workable route to raise capital without the full weight of securities registration that was designed for traditional equity issuances.
Sixth — and this is the provision that earned the bill its secondary name, the Anti-CBDC Surveillance State Act — it prohibits the Federal Reserve from issuing a central bank digital currency to individuals, directly or indirectly. This provision reflects Republican concerns about government surveillance through financial infrastructure.
As FintechWeekly has reported
FinTech Weekly has covered the CLARITY Act across multiple articles. Read more if you want to dive deeper:
The SEC versus CFTC question
The jurisdictional question at the centre of the CLARITY Act is not just regulatory housekeeping. It determines which agency writes the rules, who pays the fees, and how aggressively the government can act against the industry.
The SEC has historically been more aggressive toward crypto than the CFTC. Under Gary Gensler's tenure, which ended in January 2025, the SEC filed enforcement actions against Coinbase, Binance, Ripple, Kraken, and dozens of other companies, arguing that most tokens qualified as securities. The CFTC, which regulates commodities markets including oil, gold, and agricultural futures, has taken a less adversarial posture toward crypto.
The CLARITY Act significantly narrows the scope of assets the SEC can claim. By defining most blockchain-native tokens as digital commodities rather than securities, the bill moves regulatory authority over the largest and most active part of the crypto market to the CFTC. The SEC retains jurisdiction over primary market fundraising — when a project first sells tokens to raise capital — and over any digital asset that functions as an investment contract. For secondary market trading of digital commodities, the CFTC takes over.
The banking industry's objection to this arrangement is not about the SEC versus CFTC question specifically. It is about what happens to stablecoin yield.
The stablecoin yield fight
The most contentious provision in the Senate version of the CLARITY Act has nothing to do with the jurisdictional structure. It is a single amendment, backed by the US banking industry, that would prevent crypto exchanges and platforms from paying interest to customers who hold stablecoins on their platforms.
The banking industry's argument is that a stablecoin account that pays yield is functionally equivalent to a savings account. Banks that offer savings accounts are subject to deposit insurance requirements, capital requirements, and the full weight of federal banking regulation. A crypto platform that offers yield on stablecoins without those requirements is, from the banking industry's perspective, competing on an unlevel playing field.
The crypto industry's counter-argument is that stablecoin yield is revenue sharing from the interest earned on the Treasury bills held in reserve — not a deposit product — and that restricting it damages legitimate business models without a corresponding consumer protection benefit.
CLARITY Act - Banks vs. Crypto Industry
| Banks' Argument | Crypto Industry's argument |
| Banks that offer savings accounts are subject to deposit insurance requirements, capital requirements, and the full weight of federal banking regulation. A crypto platform that offers yield on stablecoins without those requirements is competing on an unlevel playing field. |
Stablecoin yield is revenue sharing from the interest earned on the Treasury bills held in reserve — not a deposit product. Restricting it damages legitimate business models without a corresponding consumer protection benefit. |
For Coinbase, stablecoin-related revenue represented close to 20% of total revenue in the third quarter of 2025. Armstrong described the yield restriction as a provision designed to protect bank profits rather than consumers.
This disagreement has been the primary obstacle to Senate passage since January 2026.
CLARITY Act - The timeline
- May 29, 2025: The House Financial Services Committee and the House Agriculture Committee jointly introduced H.R. 3633.
- June 23, 2025: Both committees formally reported the bill to the full House.
- July 17, 2025: The House passed the CLARITY Act 294-134. The vote was bipartisan, though most Democratic votes against it cited concerns about investor protections.
- December 2025: The White House crypto and AI adviser David Sacks announced a Senate markup session would take place in January 2026.
- January 14, 2026: The Senate Banking Committee postponed its markup session on the day it was scheduled to begin. Over 100 proposed amendments had been filed, including the banking industry's stablecoin yield amendment. Committee Chairman Tim Scott chose to postpone rather than risk a failed vote. On the same day, Armstrong posted publicly that Coinbase could not support the bill as written.
- January 27, 2026: The Senate Agriculture Committee, which has jurisdiction over the CFTC-related portions of the bill, held its markup. The Senate Banking Committee had not yet rescheduled.
- February 2026: Multiple White House meetings between crypto executives, banking representatives, and lawmakers. The White House set March 1 as the deadline for reaching a compromise on stablecoin yield. Deputy Treasury Secretary and former Goldman Sachs executive Scott Bessent called for rapid passage, citing the 2026 midterm elections as creating urgency.
- March 1, 2026: The White House deadline expired without a public compromise. Both sides described negotiations as ongoing.
- March 8, 2026: Trump posted on Truth Social that he would not sign any legislation until the SAVE America Act — a voting reform bill requiring proof of citizenship for voter registration — cleared Congress in its strongest form. The post made no mention of crypto but placed the CLARITY Act further back in the Senate's legislative queue.
- March 10, 2026: Senators at a crypto summit said they were working on a stablecoin yield compromise. The American Bankers Association continued to lobby against any yield provision. The Senate Banking Committee was reported to be eyeing a mid-to-late March markup window for a second attempt.
Who supports the CLARITY Act
The White House has been the most vocal institutional supporter. Trump signed an executive order in January 2025 directing federal agencies to take a more favourable posture toward crypto and directed his administration to make the United States the crypto capital of the world. Treasury Secretary Bessent has described passage as a spring 2026 target.
Ripple CEO Brad Garlinghouse has estimated passage odds at 80 to 90%.
JPMorgan analysts described CLARITY Act passage by midyear as a positive catalyst for digital assets, citing regulatory clarity, institutional scaling, and tokenisation growth as key drivers.
Coinbase, which withdrew support in January, subsequently described follow-up White House conversations as constructive and signalled it was working toward a compromise.
The Blockchain Association sent 21 executives from 18 companies to meet with 24 Senate offices specifically on the DeFi provisions.
Who opposes it
The American Bankers Association (ABA) has lobbied against the stablecoin yield provisions consistently since the Senate markup was announced. The ABA's position is that yield-bearing stablecoins on unregulated platforms create a regulatory arbitrage that disadvantages traditional banks.
The North American Securities Administrators Association (NASAA), which represents state securities regulators across all 50 states, has expressed concern that the bill weakens state enforcement authority over digital asset fraud. NASAA supports the bill's broad framework but has called for specific amendments to preserve state anti-fraud powers.
Some Democrats have argued the bill does not adequately protect retail investors and moves too much authority away from the more experienced SEC toward the less-resourced CFTC.
Cardano founder Charles Hoskinson called the bill, in its current Senate form, a horrific, trash bill that could push future crypto founders offshore. His objection was to specific DeFi provisions he argued would harm decentralised protocol developers.
The two Senate bills
A detail is that there are currently two Senate versions of the CLARITY Act moving on parallel tracks.
The Senate Banking Committee is marking up provisions covering SEC-related elements: investor protection, securities treatment of digital assets, and stablecoin regulation.
The Senate Agriculture Committee is marking up provisions covering CFTC-related elements: commodity market oversight, exchange registration, and derivatives.
Both committees must complete their markup processes before the bill can go to the Senate floor.
The two versions must then be reconciled with each other, and the combined Senate bill must be reconciled with the House-passed version. That reconciliation process, which in complex legislation can take months, has not yet begun because neither Senate committee has completed its markup.
The midterm clock
Every senator and congressional observer covering this legislation cites the same deadline: November 2026 midterm elections.
Midterm elections historically go against the sitting president's party. If Republicans lose the Senate majority in November 2026, the CLARITY Act's political dynamics change entirely.
The crypto lobby has invested heavily in political relationships with both parties, but Republican leadership has been the primary driver of this legislation's momentum.
The practical implication is that any Senate floor vote needs to happen before August 2026, when campaigning begins in earnest and the Senate's calendar effectively closes for controversial votes. Given that two markup processes still need to be completed and the stablecoin yield dispute has not been resolved, that timeline is tight.
Delays have reportedly contributed to nearly $1 billion in crypto market outflows, according to data from CoinShares. Prediction markets currently price 2026 signing odds at 72%.
What happens if it passes
Companies that operate digital commodity exchanges, brokers, or dealers would have 90 days from the date registration processes are established to register with the CFTC. During provisional registration, they must protect customer assets, maintain books and records accessible to the CFTC, and comply with applicable statutory requirements.
The CFTC would have 180 days from enactment to establish the expedited registration process. Most substantive rules under Title III and Title IV of the bill take effect 360 days after enactment.
The joint SEC-CFTC rulemakings required by the bill — including the critical definition of digital commodity that determines which assets fall under which regulator — must be completed before those definitions become binding. Until that joint rulemaking is complete, companies operating under provisional registration can continue listing any digital asset they currently list.
What happens if it fails
If the CLARITY Act does not pass in 2026, the status quo continues. Crypto companies operate under regulatory uncertainty. The SEC retains broad discretion to argue that digital assets are securities. The CFTC's authority over spot crypto markets remains limited to anti-fraud and anti-manipulation cases. Institutional adoption of crypto infrastructure continues to advance without a clear statutory framework governing it.
The crypto lobby has signalled it would treat a failed CLARITY Act as a political liability for any elected official who blocked it. Whether that pressure is sufficient to force passage in a compressed legislative calendar is the question the next few weeks will answer.
This article was last updated on March 12, 2026. Editor's note: We are committed to accuracy. If you spot an error, a missing detail, or have additional information about the CLARITY Act or related legislation, please email us at [email protected]. We will review and update promptly.
