Two federal regulators. One asset class. And for years, nobody in Washington could agree who’s actually in charge of your crypto. That regulatory limbo has pushed exchanges offshore, kept banks on the sidelines, and left crypto assets without clear protections if a platform collapses. The CLARITY Act, H.R. 3633, is Congress’s attempt to finally draw the lines—and the Senate could vote on it as soon as this week.
Table of Contents
What Is the CLARITY Act?
The CLARITY Act is proposed federal legislation designed to build a market-structure framework for digital assets in the United States. Instead of leaving crypto oversight to court rulings and enforcement actions, the bill tries to define, in statute, which federal regulator oversees which type of digital asset, transaction, and intermediary.
At its core, the bill amends two existing laws: the Commodity Exchange Act, which the CFTC administers, and it makes conforming changes to the GENIUS Act, the federal law that already governs payment stablecoins. The CLARITY Act doesn’t replace the GENIUS Act—it works alongside it, addressing market-structure questions the stablecoin law doesn’t cover.
Contrary to some shorthand descriptions, the CLARITY Act is not simply a stablecoin bill, and it doesn’t declare that every cryptocurrency is legally a commodity. Its goal is broader: to divide jurisdiction over digital-asset issuance, trading, and intermediaries between the SEC and CFTC, while adding investor and customer protections along the way.
Is the CLARITY Act Law Yet?
No. As of September 2026, the CLARITY Act has not been signed into law. Here’s the timeline so far:
- The House introduced H.R. 3633 on May 29, 2025.
- The House passed the bill 294–134 on July 17, 2025.
- The Senate Banking Committee advanced its version 15–9 on May 14, 2026.
- On July 22, 2026, lawmakers released an updated Senate text that merges work from the Banking and Agriculture Committees.
- Senate scheduling materials indicate that a cloture vote—a procedural step to limit debate and move toward a final vote—is set to ripen on September 15, 2026, at 2:15 p.m.
Cloture doesn’t mean passage. It only ends debate and clears the way for a vote on the motion to proceed. The bill could still change, stall, or fail on the floor.
Here’s what happens next either way:
- If cloture gets 60 votes, the Senate moves to formal debate, amendments, and an eventual up-or-down vote on passage.
- If it falls short, the bill is effectively dead for 2026, with any revival likely pushed into the next Congress.
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Why Does the U.S. Need the CLARITY Act?
For years, U.S. crypto companies have operated without a clear answer to a basic question: is this token a security, a commodity, or something else? The SEC and CFTC have sometimes taken conflicting positions, and enforcement actions—rather than legislation—have shaped much of the practical rulebook.
That uncertainty has pushed some exchanges and developers to relocate operations overseas, made it harder for banks and institutions to justify entering the market, and left everyday users without consistent protections for their crypto holdings. The CLARITY Act is Congress’s attempt to replace this patchwork with statutory rules that both agencies, and the industry, can point to directly.
How the CLARITY Act Works
The bill doesn’t sort tokens into “security” or “commodity” buckets once and for all. Instead, it applies a multi-step analysis that looks at the asset, how it’s sold, who’s involved, and which regulator has jurisdiction over the specific transaction.
Step 1—Identify the Digital Asset
The CLARITY Act starts by identifying what type of digital asset is involved. The bill recognizes several categories, including digital commodities, network tokens, payment stablecoins, tokenized securities, non-fungible tokens (NFTs), and digital consumer tokens. Each category comes with different regulatory consequences.
Step 2—Look at How the Asset Is Offered or Sold
Next, the framework asks how the asset reaches the market. A token offered as part of an investment contract—where buyers expect profit from the efforts of others—triggers different rules than a token sold on a spot market with no accompanying promises of managerial effort.
Step 3—Identify the Exchange, Broker, Dealer, or Other Intermediary
The bill then looks at the intermediary handling the transaction. It creates defined categories: digital commodity exchanges, digital commodity brokers, and digital commodity dealers. Each faces registration and compliance obligations under the CFTC.
Step 4—Determine Which Regulator Has Authority
Finally, the framework assigns jurisdiction. Title I of the current Senate text explicitly allocates digital-asset jurisdiction between the SEC and CFTC, based on the asset type, the transaction structure, and the intermediary involved.
SEC vs. CFTC—Who Would Regulate Crypto under CLARITY?
The bill divides authority rather than handing crypto entirely to one regulator.
What Would Remain under the SEC
The SEC keeps jurisdiction over securities, investment contracts, and tokenized securities. It also oversees disclosure requirements tied to ancillary assets—network tokens that carry investment-contract characteristics—and it participates in a new “Regulation Crypto” exemption for qualifying ancillary-asset offerings.
What Would Fall under the CFTC’s Digital Commodity Framework
The CFTC would get exclusive jurisdiction over covered digital-commodity cash or spot-market transactions handled by entities required to register with it, including digital commodity exchanges, brokers, and dealers. The bill also preserves the CFTC’s existing anti-fraud and anti-manipulation authority over commodity spot transactions.
The two agencies aren’t meant to work in isolation. The bill directs them to use an SEC–CFTC Memorandum of Understanding, an interagency coordination mechanism that supports information sharing and joint enforcement, and they would jointly operate a CFTC–SEC Micro-Innovation Sandbox for controlled testing of new products.
How Does the CLARITY Act Classify Crypto Assets?
The bill defines several asset categories, each with its own regulatory path:
- Digital commodity—traded on a spot market, regulated by the CFTC, and eligible for custody by a qualified digital asset custodian.
- Network token—a broad category of digital assets that may be classified as an ancillary asset depending on how it’s structured and sold.
- Ancillary asset—a network token whose value depends on entrepreneurial or managerial efforts. It can trigger SEC disclosure requirements even while the token itself may be treated as a commodity for other purposes.
- Payment stablecoin—governed primarily by the GENIUS Act, with additional market-structure rules and a yield restriction under CLARITY.
- Tokenized security—remains a security under federal securities laws and generally receives the same treatment as the asset it represents.
- Non-fungible token—may receive a securities-law safe harbor, though NFTs involved in investment-contract structures can still trigger securities rules.
The Most Important Concept: The Token and the Transaction Are Not the Same Thing
This is the part of the bill that’s easiest to misunderstand. The regulatory treatment of a specific transaction doesn’t permanently fix the legal character of the underlying token.
Under the July 22 Senate framework, a network token can be classified as an ancillary asset if its value depends on entrepreneurial or managerial efforts. Certain sales of that token can trigger SEC disclosure obligations. At the same time, the bill’s section-by-section summary treats the token itself as a commodity for other purposes.
In other words, the common shorthand—”SEC if it’s a security, CFTC if it’s a commodity”—doesn’t fully capture how the bill works. Legal analysis from Gibson Dunn similarly describes the framework’s central idea as focused on whether a transaction involves an investment contract, even when the token itself gets non-security treatment for specified purposes elsewhere in the same framework.
That’s why a single token can be subject to SEC disclosure rules in one transaction and CFTC oversight in another, depending on how it’s sold and who’s involved.
What Would Change for Crypto Exchanges, Brokers, and Dealers?
The CLARITY Act creates three new categories of CFTC-regulated intermediaries for spot digital-commodity markets. All three share common obligations: registration, customer-asset segregation, use of qualified digital asset custodians, and compliance with AML/CFT obligations under the Bank Secrecy Act.
Digital Commodity Exchanges (DCEs)
These are trading venues where digital commodities are bought and sold. DCEs would need to meet listing standards, maintain trade surveillance systems, and segregate customer assets from company funds.
Digital Commodity Brokers (DCBs)
Brokers act as intermediaries connecting customers to the market. Like exchanges, they’d face customer-asset segregation requirements and would need to use qualified custodians for customer holdings.
Digital Commodity Dealers (DCDs)
Dealers trade digital commodities for their own accounts while facilitating customer transactions. They face the same core compliance requirements as exchanges and brokers, including financial-resource requirements and conflict-of-interest rules.
How Would the CLARITY Act Protect Customer Crypto?
Beyond registration, the bill lays out specific customer protections that determine what happens if an exchange, broker, or dealer runs into trouble.
Customer-asset segregation requires that intermediaries keep customer funds separate from company funds—so customer crypto isn’t used to cover a company’s own losses or debts. Qualified digital asset custodians hold customer assets under a defined custody framework, adding a layer of protection between the customer and the intermediary.
The Senate summary also describes a specific bankruptcy regime for digital commodities and ancillary assets. This customer property protection is designed to apply in bankruptcy proceedings, potentially giving customers a clearer claim to their assets if a platform fails—rather than leaving them as unsecured creditors competing with everyone else.
Segregation and custody rules turn “more regulatory clarity” from a vague promise into something concrete: they determine what actually happens to your crypto if a company collapses.
What Does the CLARITY Act Mean for DeFi?
The bill doesn’t broadly exempt decentralized finance (DeFi) from regulation. Instead, it draws a line between protocols that are genuinely decentralized and those that aren’t.
A decentralized finance trading protocol becomes a “non-decentralized DeFi trading protocol” under the bill if certain parties retain control, operational discretion, or the ability to alter or censor how the protocol works. If a protocol meets that threshold, the people controlling it can face tailored securities-intermediary requirements and applicable Bank Secrecy Act obligations.
The bill also separately defines a distributed ledger messaging system—essentially, a web-hosted front end that transmits user instructions to a protocol. This is explicitly distinguished from the underlying blockchain protocol itself. Treasury is directed to issue AML/CFT and sanctions guidance specifically for covered, U.S.-operated front ends.
This layered approach—protocol, control, developer, and interface treated as separate things—is easy to miss in simplified explainers, but it’s central to how the bill would actually apply to DeFi projects.
What Does CLARITY Mean for Crypto Developers and Self-Custody?
The bill includes specific protections for software developers who don’t control how a protocol operates. Under a Software Developer Safe Harbor, qualifying non-controlling software developers are protected when they engage in software development, transaction validation, or wallet software creation. This safe harbor preserves regulators’ anti-fraud authority—it protects developers from being automatically classified as regulated intermediaries, not from fraud enforcement.
The bill also incorporates a concept similar to the Blockchain Regulatory Certainty Act, under which qualifying non-controlling developers aren’t treated as money transmitters simply for writing or maintaining code.
For everyday users, the bill states that federal agencies generally can’t prohibit or impair a person’s ability to use a self-hosted wallet to custody their own digital assets. It separately defines self-custodied digital assets as those where the owner exclusively controls the private keys.
These protections don’t eliminate criminal, AML, terrorism-financing, or sanctions enforcement. Self-custody protection is about preventing blanket bans on personal custody—not about creating immunity from law enforcement.
AML, KYC, and Crypto Compliance under CLARITY
The CLARITY Act is not a purely deregulatory bill. Under the current Senate text, digital commodity exchanges, brokers, and dealers would be treated as financial institutions for Bank Secrecy Act purposes. That classification brings a full set of AML/CFT obligations, including:
- Customer identification
- Customer due diligence
- Transaction monitoring
- Sanctions compliance
The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, administers the Bank Secrecy Act and would oversee AML/CFT compliance for these entities. Treasury and other agencies would also take on additional illicit-finance responsibilities under the bill.
Some descriptions of CLARITY frame it as purely deregulatory, but this expanded compliance perimeter says otherwise. Even Coinbase’s own policy materials—an industry advocacy source, worth reading with that context in mind—identify the expanded AML framework as one of the bill’s major components.
It also adds enforcement tools beyond the standard AML checklist, spelled out in the Senate committee’s own fact sheet:
- Registration and disclosure rules for digital asset kiosks, including a 72-hour holding period for new customers’ transactions.
- A new Digital Asset Cyber Innovation Center aimed at state-sponsored hacking and stolen-asset recovery.
- A safe harbor letting exchanges pause suspicious transactions without facing customer lawsuits.
What Does the CLARITY Act Mean for Stablecoins?
Payment stablecoins are already governed by the GENIUS Act, a separate federal law. The CLARITY Act doesn’t replace that law—it makes conforming changes and addresses market-structure questions the GENIUS Act doesn’t cover.
One of the more debated provisions is the stablecoin interest-and-yield restriction. The current draft would generally prohibit covered digital-asset service providers from paying U.S. customers interest or yield solely for holding a payment stablecoin, or compensation economically equivalent to bank-deposit interest.
However, the bill preserves activity-based rewards—compensation tied to actual activities like transactions, liquidity provision, staking, governance participation, or loyalty programs. The line between prohibited passive yield and permitted activity-based rewards would be clarified through SEC, CFTC, and Treasury rulemaking, so exact boundaries aren’t settled yet.
The bill also confirms that CFTC authority over certain stablecoin transactions on registered entities doesn’t extend to regulating the stablecoin issuer’s operations or the payment stablecoin itself—that stays with the GENIUS Act framework.
What about Tokenized Stocks, Bonds, and Other Securities?
The CLARITY Act explicitly states that tokenized securities remain securities. A tokenized version of a stock or bond generally receives the same regulatory treatment as the underlying security it represents, and it stays under SEC jurisdiction through federal securities laws.
Some commentary suggests CLARITY broadly removes blockchain-based assets from securities law, but wrapping a security in blockchain technology doesn’t change its legal status under this bill.
What Would the CLARITY Act Mean for Crypto Users?
Here’s how the framework could affect you in practice, depending on how you interact with crypto.
If You Use a Centralized Exchange
Exchanges would need to register as digital commodity exchanges, segregate your assets from company funds, and use qualified custodians. You’d also get standardized risk disclosures before trading.
If You Hold Crypto with a Custodian
Custody providers acting as qualified digital asset custodians would follow defined standards for holding customer digital assets, adding a layer of protection separate from the exchange or broker you use.
If You Self-Custody
Your right to use a self-hosted wallet would be explicitly protected from federal prohibition. Agencies generally couldn’t bar you from holding your own keys, though AML, sanctions, and criminal laws would still apply.
If You Use DeFi
The protocol you’re using could face different treatment depending on whether it’s classified as decentralized or non-decentralized based on who controls it. Front ends operated by U.S. entities would likely face AML and sanctions guidance from the Treasury.
If You Hold Stablecoins
If you’re holding stablecoins for savings or payments, you generally wouldn’t receive passive interest just for holding a payment stablecoin—but you could still earn rewards tied to actual activities like staking or providing liquidity.
If a Crypto Platform Goes Bankrupt
Customer property protection provisions and asset-segregation rules would apply in bankruptcy proceedings, aiming to give you a clearer claim to your digital commodities or ancillary assets than you might have today.
What Would CLARITY Mean for Crypto Companies?
Token Issuers and Crypto Startups
Startups could use the proposed Regulation Crypto exemption for qualifying ancillary-asset offerings, but it comes with eligibility conditions, disclosure requirements, fundraising limits, and resale restrictions. It’s a narrow securities-law path, not a blanket exemption.
Centralized Exchanges
Exchanges would need to register with the CFTC as digital commodity exchanges, meet listing standards, maintain trade surveillance, and build compliance programs covering conflicts of interest and system safeguards.
Brokers and Dealers
Brokers and dealers face similar registration and compliance burdens as exchanges, plus financial-resource requirements tailored to their role in the market.
Custodians
Firms seeking to serve as qualified digital asset custodians would need to meet defined standards for holding customer digital assets securely and separately from company assets.
DeFi Teams and Software Developers
Genuinely non-controlling developers get protection under the Software Developer Safe Harbor. Teams that retain control or operational discretion over a protocol risk classification as a non-decentralized DeFi trading protocol, triggering intermediary-level obligations.
Traditional Financial Firms Entering Crypto
Banks and traditional financial institutions get a clearer set of federal rules for entering digital-asset markets, potentially reducing the legal uncertainty that has kept some firms on the sidelines.
What Does the CLARITY Act Mean for Bitcoin, Ethereum, and Altcoins?
CLARITY doesn’t sort specific cryptocurrencies into fixed categories by name. Instead, its classification framework depends on how a given asset is structured, sold, and used. Assets widely treated as digital commodities in current CFTC practice would likely continue along that path under the bill’s framework, while tokens tied more closely to ongoing managerial or entrepreneurial efforts could face ancillary-asset treatment and related SEC disclosure requirements.
The practical classification of any specific token would depend on facts the bill directs regulators to evaluate—not on the ticker symbol.
Benefits Supporters See in the CLARITY Act
Clearer SEC and CFTC Responsibilities
Supporters argue that dividing jurisdiction through statute, rather than through case-by-case enforcement, gives companies a stable basis for compliance planning.
A Federal Framework for Crypto Trading Markets
The bill would create a comprehensive federal registration and oversight system for digital commodity exchanges, brokers, and dealers—something the U.S. currently lacks at the federal level for most spot crypto trading.
More Predictable Rules for Token Projects
The Regulation Crypto exemption and the ancillary-asset framework give token issuers a defined, if narrow, path to raise funds without full securities registration.
Customer Asset and Custody Protections
Segregation requirements, qualified custodian rules, and bankruptcy protections aim to reduce the risk that customers lose everything when a platform fails.
Greater Legal Certainty for Developers
The Software Developer Safe Harbor and self-custody protections address years of uncertainty about whether writing code or holding your own keys could trigger regulatory liability.
Criticism, Risks, and Open Questions
Could CLARITY Weaken Some Securities-Law Protections?
Critics worry that shifting certain tokens toward CFTC oversight, or into the ancillary-asset category, could reduce the disclosure and enforcement tools historically available under securities law.
Is the Ancillary Asset Framework Too Broad?
NASAA, which represents state securities regulators, has argued that parts of the bill could create gaps that bad actors might exploit—particularly around how ancillary assets are defined and disclosed.
NASAA’s specific asks include:
- A comprehensive savings clause preserving state securities and commodities anti-fraud, investigative, and enforcement authority.
- Maintaining “regulatory parity” in how tokenized and non-tokenized securities get treated.
- Preserving state licensing and registration authority over broker-dealers.
How Decentralized Must DeFi Really Be?
The bill’s control-and-discretion test for DeFi protocols is fact-specific. Projects and regulators may disagree, at least initially, about where a given protocol falls on that spectrum.
The Stablecoin Yield Debate
Banking industry groups warn that reward-bearing stablecoins could pull deposits away from banks and constrain lending. A White House Council of Economic Advisers analysis found the opposite: banning stablecoin yield would raise bank lending by just $2.1 billion, or about 0.02%, at a net welfare cost of $800 million. Neither prediction is settled fact—it’s an active economic debate.
How Much Will Depend on SEC and CFTC Rulemaking?
Even after passage, the framework depends heavily on rules the SEC and CFTC would need to write. The July 22 summary generally requires those rules within 360 days to one year of enactment. A signature wouldn’t immediately settle every token classification, registration procedure, or DeFi question.
Could the Senate Text Change Again?
Yes. The bill has already changed substantially between the House-passed version and the Senate’s merged July 22 text. Further amendments are possible before—or during—floor consideration.
Where Does the CLARITY Act Stand Now?
May 2025—H.R. 3633 Is Introduced
The House introduced the Digital Asset Market Clarity Act on May 29, 2025.
July 2025—The House Passes the CLARITY Act
The House passed the bill 294–134 on July 17, 2025, sending it to the Senate.
2026—Senate Committees Rewrite and Advance the Framework
The Senate Banking Committee advanced its version 15–9 on May 14, 2026, incorporating substantial changes to the House-passed text.
July 22, 2026—Updated Merged Senate Text
Lawmakers released a merged Senate text combining work from the Banking and Agriculture Committees, refining definitions around ancillary assets, DeFi, custody, and AML obligations.
September 2026—Senate Floor Procedure
As of September 8, 2026, the bill hadn’t become law. Senate scheduling materials indicate that cloture on H.R. 3633—a procedural vote to limit debate—was set to expire on September 15, 2026, at 2:15 p.m., ahead of a possible vote on the motion to proceed.
If the CLARITY Act Passes, When Would the New Rules Begin?
Even after a presidential signature, the CLARITY Act wouldn’t take effect immediately. The current Senate draft generally sets an effective date 360 days after enactment, with certain rule-dependent provisions kicking in later, once the SEC and CFTC finish required rulemaking.
That means companies, developers, and users would have roughly a year—or longer, for some provisions—before most requirements apply. Expect a phased rollout rather than a single flip of the switch.
Final Words
The CLARITY Act is Congress’s biggest swing yet at giving U.S. crypto markets real rules: who regulates what, how your assets stay protected, and where DeFi and stablecoins fit in. It’s not law yet, and Tuesday’s Senate vote is only a procedural step, so the details could still shift before anything reaches the president’s desk. Whatever happens on the Hill, you can keep swapping crypto today. Changelly lets you exchange thousands of coins in minutes, no traditional exchange account required.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
