The core dilemma facing the U.S. digital asset industry over the long term is not excessive regulation, but ambiguous regulatory attribution. A jurisdictional turf war between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) that has dragged on for years has left project teams, exchanges, and investors unable to determine whether a given digital asset should be classified as a security or a commodity. This uncertainty has directly fostered the rise of “enforcement-style regulation”—regulators defining market boundaries through lawsuits and enforcement actions rather than through clear rules.
Against this backdrop, the Digital Asset Market Clarity Act (Digital Asset Market Clarity Act), also known as the CLARITY Act, was created. The bill was officially introduced on May 29, 2025 by French Hill, the chair of the House Financial Services Committee. Its core goal is to replace the previous enforcement-driven model with a rules-based federal regulatory framework, providing clear and comprehensive legal authority for the issuance, trading, and intermediary activities of digital assets.
From an industry-structural impact perspective, the legislative process of the bill goes far beyond a simple regulatory issue. It is about fundamentally reshaping the power structure of the U.S. digital asset market—clarifying the division of jurisdiction between the SEC and CFTC, establishing a statutory definition of digital commodities, and providing exchanges and project teams with a predictable compliance pathway. That is why, since its introduction, the bill has continuously occupied a central position on the U.S. congressional legislative agenda.
How the CLARITY Act reshapes the SEC and CFTC regulatory boundaries
The most core institutional design of the CLARITY Act is to establish a structured division of responsibilities between the SEC and CFTC. Under the draft bill, digital assets are divided into three broad categories.
The first is “digital commodities.” The value of these assets comes from the blockchain network’s operation itself. Once the network is deemed to have reached a sufficient level of decentralization, it will be brought under CFTC’s exclusive jurisdiction. Trading platforms that handle digital commodities must register with the CFTC and comply with rules on segregation of customer assets, market monitoring, risk management, and anti-manipulation.
The second category is “ancillary assets,” which still depend on the issuer’s ongoing efforts. These assets will continue to be regulated by the SEC and require corresponding disclosures, including audited financial statements, ownership information, and token economic models, among others.
The third category consists of digital assets that have been explicitly determined to be securities, for which the SEC retains full regulatory authority.
The practical effect of this classification framework is to greatly narrow the SEC’s jurisdiction while establishing the CFTC as the primary regulator for digital commodities. In addition, the bill also defines customers’ own cryptocurrencies as “customer property” in the context of exchange insolvency, separating them from company assets, thereby filling the legal loopholes exposed by the collapses of Celsius and Voyager.
The bill also includes Section 604—the “Ensuring Blockchain Regulatory Certainty Act,”—aimed at protecting non-custodial software developers from being automatically classified as money transmitters. This provision allows developers to publish open-source code, provide self-custody tools, or maintain blockchain infrastructure without taking on monetary transfer obligations solely because of those activities.
CLARITY Act timeline: from a high-vote House passage to a Senate sprint
The legislative process of the CLARITY Act has gone through several key milestones.
July 17, 2025: the bill passed the House with a bipartisan majority of 294 votes in favor and 134 against. This vote result received cross-party support from 78 Democratic lawmakers, representing the strongest cross-party consensus on digital asset legislation in the U.S. Congress to date.
January 2026: the bill cleared review by the Senate Committee on Agriculture.
May 14, 2026: the Senate Committee on Banking advanced the bill by a vote of 15 to 9, with bipartisan support. Democratic Senators Ruben Gallego and Angela Alsobrooks supported the legislation together with Republican members, but both stated that their final support depends on modifications made before the full Senate floor vote.
June 1, 2026: the bill was placed on the Senate legislative calendar, calendar number 423.
However, after that, the bill fell into a months-long stalemate due to controversy over an ethics provision. The ethics provision is intended to prohibit senior officials such as the President, Vice President, and Members of Congress from profiting from digital asset activities during their terms. The dispute intensified after disclosures in President Trump’s 2025 financial filing showed approximately $1.4 billion in crypto-related income, including $594 million from World Liberty Financial and $635 million from TRUMP meme coins. Democrats directly tied their support for the bill to the inclusion of enforceable ethics provisions.
July 21, 2026: the White House reached an agreement on the ethics provision and submitted the relevant language to Republican Senators. This breakthrough removed the final major procedural obstacle to advancing the bill.
The Senate is expected to enter its summer recess in the first week of August, meaning the legislative window left for a full Senate floor vote is only about 18 legislative days.
How the market prices the legislative odds of the Clarity Act
Prediction market data clearly reflects the fluctuation trajectory of the bill’s legislative probability. At the beginning of the year, Polymarket’s probability for passage in 2026 was about 82%. As the ethics-provision stalemate persisted, this probability once fell to a historical low of 32% in mid-July. On July 20, the probability dropped further to 37%.
After news broke that the White House reached an agreement on the ethics provision, the Polymarket probability rebounded to 41%. Research firm Galaxy Research previously assessed the odds of the bill being passed within 2026 as roughly a coin flip. On July 21, Senate Republican leader John Thune said the bill “has a shot” at passing the Senate.
As of July 22, 2026, according to Gate market data, Bitcoin was quoted at $66,651.2 and Ethereum at $1,939.65. Driven by a dual stimulus—U.S. Treasury Secretary Bessent’s “1 tick line” remarks and the White House’s ethics-provision breakthrough—Bitcoin briefly surged toward $67,000. In the past 24 hours, it rose more than 3.2%, reaching the highest level in more than a month. Other cryptocurrencies, including Ethereum and XRP, recorded even larger gains. Spot Bitcoin ETFs have maintained net inflows for three straight days, totaling approximately $368 million.
It is important to note that a rebound in prediction market probability does not mean the legislation is a done deal. The bill still needs to clear the 60-vote threshold for ending debate. Republicans currently hold 53 seats in the Senate, meaning that even if all Republican Senators vote in favor, at least 7 Democratic Senators must cross party lines in support. As of July 22, no Democratic Senators have publicly committed to supporting.
What core controversies and opposition voices the bill still faces
Although the White House has reached an agreement on the ethics provision, the bill still faces multiple controversies.
The enforcement mechanism for the ethics provision was the issue that dragged on the longest. Democrats demanded binding conflict-of-interest language, while the White House’s negotiation position was that any ethics language must apply uniformly to all officials, rather than being targeted at the President or his family. A prior compromise proposal meant to be enforced by state attorneys general was rejected by Democrats on the grounds that it lacked sufficient strength.
Anti–money laundering (AML) and sanctions evasion risks are another major focus. Senator Elizabeth Warren firmly opposed the bill, saying that the current draft is “a passport to sanctions evasion.” Former U.S. Special Representative for Iran Affairs Richard Nephew supported this stance, pointing out that the bill’s exemptions for decentralized finance (DeFi) and weak AML requirements would create loopholes. Nephew said the bill would make it impossible to carry out the Treasury Department’s recent freeze of more than $1 billion in Iranian crypto assets.
Opposition from law enforcement agencies is also not to be ignored. The National Sheriffs’ Association publicly opposed the bill, accusing cryptocurrencies of being the “preferred currency of cartels.” The National District Attorneys Association raised concerns with Senate leadership that Section 604 of the bill would severely damage criminal investigations involving cryptocurrencies.
Stablecoin yield and DeFi regulation remain contentious as well. Banking lobbying groups initially pushed pressure on the bill due to stablecoin yield issues, and more recently rebranded their opposition under a “illegal finance” narrative. In addition, Lauren Belive, Ripple’s global head of public policy and government affairs, publicly opposed the bill, calling it “anti-consumer” behavior.
How would passage or failure reshape the industry landscape
If the CLARITY Act is ultimately passed, its impact on the industry will be structural.
For exchanges, the bill will provide a clear federal registration and compliance framework. Digital commodity trading platforms must register with the CFTC and comply with rules on segregation of customer assets and market monitoring. The asset-classification uncertainty that has long plagued exchanges will be greatly reduced, and the predictability of compliance costs will be significantly improved. A report from Jefferies noted that passage of the bill would drive banks, asset management institutions, and exchanges to accelerate their deployment of tokenized assets, custody, staking, lending, and related businesses.
For project teams, the bill provides a clear path to transition from “ancillary assets” to “digital commodities.” Once the network reaches sufficient decentralization, project teams can move from the SEC’s securities regulatory framework to the CFTC’s commodity regulatory framework, thereby shedding ongoing disclosure obligations and litigation risks. In addition, any tokens that were already listed for spot trading on national securities exchanges as underlying assets of spot ETFs before January 1, 2026 will be automatically recognized as non-securities. This means that not only Bitcoin and Ethereum would be treated as non-securities, but SOL and XRP launched in the fourth quarter of 2025 would also receive the same determination.
For investors, the bill will reduce room for regulatory arbitrage and the risk of market manipulation. It will extend the regulatory requirements of the Bank Secrecy Act to digital asset brokers, dealers, and exchanges, requiring them to establish anti–money laundering and anti–terrorist financing procedures. Bankruptcy-remote protection for customer assets will also provide investors with additional legal safeguards.
For the ETF market, by establishing clearer standards for recognizing underlying assets, the bill may clear regulatory obstacles for approving more digital asset spot ETFs.
If the bill fails to pass, regulatory uncertainty would likely persist at least through 2027. Senator Lummis warned that if the current legislative window is missed, structural market legislation could be delayed until 2030.
Global coordinates for the rollout of the U.S. crypto regulatory framework
The legislative process of the CLARITY Act is not an isolated event; it is a key part of the reshaping of the global crypto regulatory landscape.
The European Union’s Markets in Crypto-Assets Regulation (MiCA) became fully applicable from 2024 to 2025, establishing a unified crypto-asset regulatory framework for 27 member states. Hong Kong’s Stablecoin Ordinance also took effect in the same period, and Middle Eastern hubs such as Singapore and the United Arab Emirates are accelerating their own regulatory regimes as well. The United States, in turn, passed its first federal stablecoin law, the GENIUS Act, in 2025.
If the CLARITY Act is ultimately passed, the U.S. would complete, at the federal level, a legislative response to the fundamental question of “securities vs commodities” for digital assets. This would put the U.S. in a leading position in institutional competition among the world’s three major regulatory systems—U.S., EU, and Asia. Rules established by the bill, such as exchange registration, segregation of customer assets, anti–money laundering obligations, and controls on conflicts of interest, may become reference templates for other jurisdictions worldwide.
Conversely, if the bill stalls in the Senate again, U.S. regulatory lag would become even more apparent. Russia is moving forward with building its own crypto-asset regulatory framework, and the window for a global regulatory race is rapidly narrowing.
FAQ
Q: What is the full name of the CLARITY Act?
A: The full name of the CLARITY Act is the Digital Asset Market Clarity Act, and the bill number is H.R. 3633.
Q: How does the CLARITY Act divide regulatory permissions between the SEC and CFTC?
A: The bill divides digital assets into three categories: sufficiently decentralized “digital commodities” fall under CFTC jurisdiction; “ancillary assets” that still depend on the issuer’s efforts fall under SEC jurisdiction; and digital assets explicitly deemed securities are retained under full SEC authority.
Q: How many votes does the bill need to pass in the Senate?
A: Because of Senate procedural gridlock, the bill needs 60 votes to trigger cloture debate and move to a final vote. Republicans currently hold 53 seats, meaning it requires at least 7 Democratic Senators to cross party lines in support.
Q: How likely is the bill to pass before the August recess?
A: As of July 22, 2026, Polymarket’s prediction market shows the bill’s probability of being signed into law in 2026 at about 41%. Earlier, this probability once fell to a historical low of 32% in mid-July.
Q: What does the passing of the bill mean for crypto assets like Bitcoin?
A: By establishing a clearer regulatory framework, the bill reduces legal uncertainty. Bitcoin has been jointly recognized by the SEC and CFTC as a digital commodity, and passage of the bill will give it a clearer statutory status and may promote broader institutional adoption.
