U.S. House Presents the Digital Asset Market Clarity Act

Last week, the U.S. House of Representatives introduced the Digital Asset Market Clarity (CLARITY) Act in a bipartisan effort to establish a comprehensive regulatory framework for digital assets in the United States. The Act aims to provide legal certainty, protect consumers, and support innovation in the rapidly growing digital asset markets. It builds on previous efforts, notably the Financial Innovation and Technology for the 21st Century (FIT21) Act, and reflects years of bipartisan work, public input, and cross-agency consultation. It’s clear that one of its primary goals is to reinforce U.S. leadership in global digital finance.

The bill would create a new definition of “digital asset” as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or other similar technology,” distinguishing digital assets from traditional securities and commodity interests, and would divide oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). It would give the CFTC exclusive regulatory jurisdiction over digital commodity cash or spot markets that occur on or with new CFTC registered entities, which represents the bulk of crypto activity. The SEC would oversee digital assets offered as part of investment contracts and new token offerings (i.e., securities).

As with other financial products, registration and compliance are key to effective oversight. The bill strengthens transparency and accountability for market participants by establishing a new registration regime for cryptocurrency platforms and customer-facing digital asset firms. Disclosure, segregation of customer funds, and mitigation of conflicts of interest are at the top of the list as regulations are written.

The Act would introduce a process for issuers to certify that a blockchain network is sufficiently decentralized. If approved, the asset can transition from SEC oversight to CFTC oversight as commodity interests.

Regarding custody, the bill rejects the SEC’s prior attempt to require custody firms to hold customer assets on their own balance sheets. Rather, it sets a standard for “qualified digital asset custodians,” which would be defined by the CFTC.

Anti-money laundering (AML) and national security remain highly important, and the Act reaffirms that AML obligations under the Bank Secrecy Act would continue to apply and maintains the U.S. Treasury Department’s role in combating illicit finance.

Some issues, like DeFi and NFTs, are deferred. The legislation would task the SEC, CFTC, and the Treasury Department with studying these sectors and reporting back within a year. The Government Accountability Office is also directed to prepare reports on DeFi and NFTs. The bill would explicitly exempt some decentralized wallet providers and DeFi platforms from SEC oversight. It also clarifies that payment stablecoins are not securities, placing regulatory authority with whichever agency already oversees the firm engaged in the activity.

Separately from the market structure bill, the Senate will return to a floor debate next week on its stablecoin bill, which has already cleared several procedural hurdles with bipartisan support. However, it is unclear whether that legislation will mesh with whatever version of stablecoin oversight the House eventually votes on, leaving uncertainty about exactly how crypto legislation will proceed in this session.

Some discussion remains about whether the stablecoin and market structure bills should be combined as a single crypto push in Congress. Trump has called for both to land on his desk by the August congressional break, a highly ambitious goal.

Although the bill may change dramatically as it works toward passage in the House and eventually the Senate, the introduction of the CLARITY Act represents a major step toward regulatory certainty for digital assets in the U.S., aiming to balance innovation with strong consumer and market protections by clearly defining agency roles, legal standards, and compliance requirements. While FIT21 was a nice gesture, this has a different feel to it, and while regulators would have a year to put the Act's market structure rules into effect, crypto regulation seems to be coming at us quickly.