Lawmakers Shape Crypto’s Future with CLARITY Act

CLARITY 2026 Framework

The “Digital Asset Market Clarity Act of 2025,” also known as H.R. 3633, aims to classify most cryptocurrencies as commodities, thereby placing them under the Commodity Futures Trading Commission (CFTC)’s oversight. Previously, during Gensler’s term, cryptocurrencies were largely considered securities under the Securities and Exchange Commission (SEC)’s purview.

In the Senate, two different versions of CLARITY are being discussed by the Banking and Agriculture Committees, with the latter focusing on granting the CFTC broader authority under a draft seen as analogous to the House’s CLARITY Act.

On July 17, 2025, the House passed the act by a significant majority (294-134 votes). The current focus shifts to the Senate, where Senator Tim Scott and Agriculture Committee Chairman John Boozman aim to discuss it this month. There was mention of debates between the two parties in previous reports.

Markup Sessions and Legislative Process

Expected to start this month in the Senate are Markup sessions, where the Banking and Agriculture Committees hold authority over crypto laws. According to White House Crypto Advisor David Sacks and Senators Tim Scott and John Boozman, the process is anticipated to resume in January.

The Banking Committee and Agriculture Committee will review their versions to produce a unified draft within the Senate.

The third phase involves the unified text being scheduled for a vote by the Senate Majority Leader, requiring a simple majority, or 51 Senators, to pass under normal conditions. However, if Democrats attempt to sabotage the process, typically through filibuster, the requirement increases to 60 Senators supporting the bill.

After the Senate’s three-stage process, should changes occur in the Senate’s text (which is expected), any discrepancies with the House’s version will be addressed. A joint committee will draft a final “Enrolled Bill” approved by both chambers.

The fifth and final stage we will see in 2026 involves presenting the bill to Trump for signature post legislative approvals. This phase, considered the easiest, is eagerly awaited by Trump. If committee discussions and voting pass by January, a Senate vote might conclude by March. If agreements between the House and Senate finish within 3-4 months, Trump could sign the law before the August election period.

Understanding CLARITY

The proposal, as mentioned in the introduction, limits the SEC’s powers while enhancing the CFTC’s reach. The intro details reveal that the bill offers the CFTC a central role in regulating digital commodities and intermediaries while maintaining certain aspects of SEC authority over primary crypto transactions and introduces a new limited exemption from SEC registration for fundraising. Digital commodities are defined as digital assets intrinsically linked to blockchain usage excluding securities, derivatives, and stablecoins.

Legislation Details

These definitions provide a dynamic regulatory framework for determining whether an asset is a security or commodity based on blockchain’s development stages. Cryptocurrency must meet three conditions to transition from SEC oversight to CFTC as “mature blockchain:”

• The blockchain system and digital commodity should not be under the control of any person or group acting together.
• Value must largely derive from the “use and operation” of the blockchain.
• Systems should not privilege users, and no holder should possess more than 20% of the total supply.

Assets failing these criteria remain under SEC oversight. The shift aims to prevent issues previously faced with tokens held predominantly by teams or undisclosed partners.

A noteworthy legal nuance in the sources differentiates “investment contract” (a type of security) from “investment contract asset.” The legislation declares that digital assets sold via investment contracts will not automatically be considered an investment contract (and thus a security). This departs from Gensler’s broad claim that “every cryptocurrency is a security” even when partially meeting the Howey test.

Digital Commodity Exchanges (DCE), Brokers, and Dealers must register with the CFTC.

Revisions in the Bank Holding Company Act will allow financial institutions and qualified banks to operate in digital commodity markets, encouraging more corporate crypto services.

The SEC will manage the assessment of blockchain “maturity,” oversee primary market registration exemptions (up to $75 million sales limit in 12 months), and set reporting rules for immature systems. Thus, the SEC will decide on the security or commodity status of altcoins.

The CFTC will hold exclusive authority over matured blockchain-based digital commodity transactions, including spot and cash markets.