Digital Asset Market Clarity Act of 2025 (CLARITY Act) is a proposed United States federal law aimed at establishing a regulatory framework for digital assets by clarifying the jurisdiction of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

The bill seeks to provide regulatory certainty for the digital asset market, particularly by defining which digital assets are considered "digital commodities" and thus fall under the CFTC's purview, while leaving digital assets deemed securities under the SEC's authority ^{[1] [3]}.

Overview

The CLARITY Act, introduced in the 119th Congress as H.R.3633, addresses the long-standing debate in the United States regarding the regulatory classification of digital assets. ^[1]

Currently, both the SEC and the CFTC have asserted jurisdiction over various aspects of the digital asset market, leading to regulatory uncertainty often described as "regulation by enforcement" by industry participants ^[2].

The bill proposes a framework where digital assets intrinsically linked to a blockchain system, with value derived from the system's use, would generally be classified as "digital commodities" regulated by the CFTC. This classification would exclude traditional securities, certain derivatives, stablecoins, banking deposits, and non-commodity assets like NFTs ^[1].

The legislation aims to provide clear rules for digital asset exchanges, brokers, and dealers, requiring them to register with either the SEC or the CFTC based on the nature of the assets they handle. It also introduces a concept of "mature blockchain systems" and outlines requirements for initial offerings and secondary market transactions of digital commodities that may have initially involved investment contracts ^[1]. Proponents argue that this clarity is essential for fostering innovation, protecting consumers, and preventing the U.S. from falling behind other jurisdictions in the digital asset space ^[3]. Opponents have raised concerns about potential loopholes and the impact on investor protection ^[3].

History

The Digital Asset Market Clarity Act of 2025 (H.R.3633) was introduced in the U.S. House of Representatives on May 29, 2025, by Representative J. French Hill [R-AR-2] and several co-sponsors from both Republican and Democratic parties. The bill was referred to the House Committee on Financial Services and the House Committee on Agriculture. Both committees held meetings and reported the bill with amendments on June 23, 2025 ^[1].

The bill's progression occurred within a period of increased focus on cryptocurrency regulation in the U.S. Congress. Republican House leaders designated the week of July 14, 2025, as "Crypto Week" to consider several digital asset-related bills, including the CLARITY Act, the Anti-CBDC Surveillance State Act, and the GENIUS Act concerning stablecoins ^[3].

Leading crypto trade groups, including the Blockchain Association, The Digital Chamber, and the Crypto Council for Innovation, actively lobbied for the passage of the CLARITY Act, sending a joint letter to House leadership on July 11, 2025, urging its advancement ^[2]. Conversely, some Democratic lawmakers, such as Maxine Waters and Stephen Lynch, announced an "Anti-Crypto Corruption Week" in opposition to the Republican legislative push, raising concerns about the industry's influence and potential risks ^[2].

Key Provisions

The CLARITY Act introduces several key provisions aimed at establishing a comprehensive regulatory framework for digital assets in the United States.

• Definition of Digital Commodity: The bill defines "digital commodity" as a digital asset intrinsically linked to a blockchain system, with value derived from or reasonably expected to be derived from the use of that system. This definition explicitly excludes traditional securities, certain derivatives, permitted payment stablecoins, banking deposits, and certain non-commodity assets like NFTs ^{[1] [3]}.
• Regulatory Jurisdiction: The Act largely shifts regulatory jurisdiction over digital commodities to the Commodity Futures Trading Commission (CFTC). The Securities and Exchange Commission (SEC) would retain authority over digital assets classified as securities, including certain investment contracts involving digital commodities, and would have anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions engaged in by SEC-registered entities ^{[1] [3]}.
• Registration Requirements: The bill mandates registration for entities acting as digital commodity exchanges, digital commodity brokers, and digital commodity dealers with the CFTC, unless exempted. It also provides for a provisional registration status during the implementation period. SEC-registered brokers, dealers, and alternative trading systems may be exempt from CFTC registration under certain conditions if they primarily handle digital commodities, permitted payment stablecoins, or securities and meet specific trading volume thresholds ^[1].
• Mature Blockchain Systems: The legislation introduces the concept of a "mature blockchain system," defined as a blockchain system and its related digital commodity not controlled by any single person or group under common control. The bill outlines criteria for a blockchain system to be deemed mature and establishes a process for certification with the SEC ^[1].
• Primary and Secondary Transactions: The Act addresses the treatment of digital commodities that may have initially been offered or sold as investment contracts. It provides an exemption under the Securities Act of 1933 for certain primary transactions of investment contracts involving digital commodities by their issuers, subject to specific conditions and disclosure requirements. Importantly, it clarifies that secondary market transactions of digital commodities that originally involved an investment contract, when sold by someone other than the issuer or underwriter, are generally not considered the sale of a security ^[1].
• Requirements for Insiders: The bill imposes restrictions and disclosure requirements on "digital commodity related persons" and "digital commodity affiliated persons" (insiders) regarding the sale of digital commodities acquired directly from the issuer, particularly before the related blockchain system is certified as mature ^[1].
• Custody of Digital Assets: The Act includes provisions related to the custody of digital assets by registered entities, requiring the use of "qualified digital asset custodians" and outlining standards for such custodians. It also addresses the treatment of assets held in custody by banking institutions ^[1].
• Decentralized Finance (DeFi) Exclusion: The bill includes provisions to exclude certain decentralized finance activities from being subject to the Act's registration requirements, focusing on activities like compiling transactions, providing computational work, or developing software, while retaining anti-fraud and anti-manipulation authorities ^{[1] [1]}.
• International Cooperation and Studies: The Act mandates consultation and coordination with foreign regulatory authorities on digital asset regulation and requires various studies on topics such as decentralized finance, non-fungible tokens, financial literacy, financial market infrastructure, illicit use of digital assets, and foreign adversary participation in digital commodity markets ^{[1] [1]}.

Regulatory Jurisdiction

A central tenet of the CLARITY Act is the division of regulatory authority over digital assets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The bill aims to provide a clearer distinction than currently exists, where both agencies have asserted jurisdiction, leading to overlapping oversight and enforcement actions.

Under the proposed framework, digital assets that meet the definition of a "digital commodity" would primarily fall under the regulatory purview of the CFTC. This includes establishing registration requirements and core principles for digital commodity exchanges, brokers, and dealers. The CFTC would have exclusive jurisdiction over cash or spot market transactions in digital commodities conducted on or through registered entities ^[1].

The SEC would retain jurisdiction over digital assets that qualify as securities under existing securities laws. This includes investment contracts involving digital commodities, particularly during the initial offering phase before a blockchain system is deemed "mature" ^[1]. The bill also grants the SEC anti-fraud and anti-manipulation authority over permitted payment stablecoins and certain digital commodity transactions when brokered, traded, or custodied by SEC-registered entities like brokers, dealers, or alternative trading systems ^[1].

The Act requires the SEC and CFTC to engage in joint rulemakings on various aspects, including further defining key terms, handling mixed digital asset transactions (those involving both a digital commodity and a security), and establishing procedures for delisting assets if their trading is deemed inconsistent with regulations ^[1]. A memorandum of understanding between the two agencies is also mandated to ensure consistent requirements and avoid duplicative supervision for entities registered with both commissions or notice-registered with the CFTC while primarily regulated by the SEC ^[1].

Industry Support and Opposition

The CLARITY Act has garnered significant support from various participants in the cryptocurrency industry. Leading crypto trade associations, including the Blockchain Association, the Chamber of Digital Commerce, and the Crypto Council for Innovation, have actively advocated for the bill's passage. They argue that the legislation provides much-needed regulatory certainty, which is crucial for fostering innovation and enabling the digital asset industry to thrive in the United States ^{[2] [3]}.

Industry proponents believe that a clear legal framework, particularly one that designates most digital assets as commodities under the CFTC's jurisdiction, would encourage greater institutional adoption and investment. The current lack of clarity and the SEC's approach of "regulation by enforcement" are seen as hindering growth and pushing businesses to more crypto-friendly jurisdictions abroad ^{[3] [4]}.

However, the bill has also faced opposition, particularly from some Democratic lawmakers. Concerns have been raised that the CLARITY Act, along with other crypto-related bills advanced by Republicans, may not adequately protect investors and could create loopholes. Critics argue that the legislation is being rushed and could legitimize potentially risky activities within the crypto market. Some opposition is also tied to concerns about the growing financial ties between the cryptocurrency industry and political figures, suggesting that legislative efforts may be influenced by industry lobbying rather than solely focusing on consumer protection and market integrity ^[3].

Potential Impact

The potential impact of the CLARITY Act is significant for the digital asset market in the United States. If enacted, the legislation would fundamentally alter the regulatory landscape by providing a statutory definition for "digital commodity" and clearly delineating the roles of the SEC and CFTC. ^{[2] [3]}

One of the primary anticipated impacts is increased regulatory certainty. By clarifying which assets fall under which regulator's authority, the bill aims to reduce the ambiguity that has characterized the U.S. approach to digital asset regulation. This clarity is expected to encourage greater participation from institutional investors, such as asset management companies, hedge funds, and banks, who have often been hesitant to engage deeply with the market due to legal uncertainties. Analysts suggest that this could lead to a substantial increase in institutional adoption.

The bill's framework for registering digital commodity exchanges, brokers, and dealers with the CFTC would establish specific rules of the road for these intermediaries, potentially enhancing market integrity and consumer protection within the digital commodity space. The requirements for disclosures, capital, recordkeeping, and segregation of customer assets are intended to bring these markets more in line with traditional financial markets, albeit with considerations for the unique nature of digital assets ^[1].

Furthermore, the provisions related to "mature blockchain systems" and the treatment of secondary market transactions could provide a clearer path for digital assets to transition from potentially being considered securities during their initial development phase to being treated solely as commodities once the underlying network is sufficiently decentralized. This could impact how digital asset projects structure their offerings and how investors trade these assets over time ^[1].

However, the bill's impact is also subject to debate. Critics worry that shifting significant oversight to the CFTC, which traditionally regulates derivatives markets and has a smaller budget and different mandate than the SEC, might lead to less stringent investor protection for assets that retail investors might perceive as investments. The carve-outs for certain DeFi activities have also raised questions about potential regulatory gaps in that rapidly evolving sector. The effectiveness of the bill would also depend heavily on the joint rulemakings and coordination between the SEC and CFTC during the implementation phase. ^[3]