What the CLARITY Act Is Actually Trying to Clarify in Crypto Markets

Key takeaways

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

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

• The bill focuses on regulating both activities and assets, establishing registration and conduct standards for exchanges, brokers and traders to strengthen market integrity and transparency.

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

The CLARITY Act (Digital Asset Market Clarity Act of 2025) 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 perform in the market. The legislation goes beyond ad hoc enforcement and instead proposes a comprehensive framework for asset classification, intermediary functions and mandatory disclosures.

This article explains what the CLARITY Act is and why it is important, describes its goals, and examines how it proposes to govern stablecoins. It also covers the concept of mature blockchains, key 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 the crypto space: regulatory uncertainty.

For several years, digital asset companies have faced a confusing overlap between the US Securities and Exchange Commission (SEC) and the US Commodity Futures Trading Commission (CFTC). The SEC typically 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 impasse by establishing clear definitions for 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 uncertainty driven by enforcement actions.

Main objectives of the CLARITY Act

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

Define asset categories more precisely

The CLARITY Act introduces the term “digital product,” which refers to a digital asset whose value is derived primarily from the use of its associated blockchain system. This definition excludes traditional securities and stablecoins. As a result, spot trading of many qualifying tokens would fall under the purview of the CFTC. Recognizing the practical challenges faced by cryptographic networks, the definition emphasizes blockchain functionality and sufficient decentralization.

Clarify regulatory jurisdiction

The law divides supervision by function:

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

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

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

Establish consistent disclosures and rules of conduct.

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

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

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

How the CLARITY Act Deals with Stablecoins

The GENIUS Act, enacted in 2025, established a federal framework specifically for payment stablecoins. Excludes qualified stablecoins from classification as securities or commodities, provided they meet strict reserve, redemption and oversight requirements.

The CLARITY Act does not overturn or duplicate this stablecoin regime. Instead, its provisions apply in a complementary manner, particularly with respect to rewards linked to stablecoins, related 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 path through which a blockchain can reach a “mature” state by meeting decentralization and other functional criteria.

Once these criteria are met, the associated token is treated as a digital commodity 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 view that regulatory treatment should adapt as networks become more decentralized and widely distributed. 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 cases to evaluate crypto tokens, highlighting how existing legal frameworks are adapting to entirely new digital markets.

Continued criticism of the CLARITY Act

While the bill promises clarity, skepticism remains. Critics argue that their definitions can leave gaps, particularly in 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 on potential overlaps, such as how the SEC’s anti-fraud authority would apply in areas where the CFTC has primary jurisdiction, especially for tokens with hybrid features.

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 awaits action in the United States Senate, where it has been referred to the Senate Committee on Banking, Housing and Urban Affairs. The legislative process also includes input from the Senate Agriculture, Nutrition and Forestry Committee on matters related to oversight of the CFTC.

Beginning in January 2026, Senate committees held hearings, published discussion drafts, proposed amendments, and advanced versions of broader market structure legislation. However, margins have faced delays and revisions amid debate over issues such as stablecoin yields and investor safeguards. Reconciliation between the Senate bills and the House-passed bill remains ongoing, and a final vote has yet to be taken in the Senate.

If compliantly enacted, 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 showing validator concentration, token velocity, and governance participation. Regulators sometimes reference these metrics when debating whether a network is “sufficiently decentralized.”

Evaluation of the CLARITY Act model

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

The law establishes defined categories of assets, requires consistent disclosures, and assigns distinct functions to the SEC and CFTC. It aims to create a more predictable environment in which market participants understand the applicable rules from the beginning.

However, legislation is only the starting point. Implementation, rulemaking, and potential adjustments will determine the real-world impact of the CLARITY Act. Whether it ultimately delivers the promised clarity will determine US crypto policy and competitiveness for years to come.