What is the CLARITY Act?
In a long-awaited move, Congress is stepping decisively into the crypto conversation with Crypto Week, a landmark moment that could reshape the future of digital assets in the United States. At the heart of the legislative spotlight lies the CLARITY Act, short for the Digital Asset Market Structure Clarity Act, designed to bring much-needed definition to a fragmented and often contentious regulatory landscape.
The CLARITY Act, which is based on the 21st Century Financial Innovation and Technology Act and is a market structure bill, aims to answer a long-debated question: Who regulates crypto in the United States — the Securities and Exchange Commission (SEC), or the Commodities Futures and Trading Commission (CFTC)?
It was introduced on May 29, 2025, by Representative French Hill, a Republican from Arkansas who serves as chair of the House Financial Services Committee. The key provisions of the act include:
- Defines digital assets clearly: Establishes consistent legal definitions for terms such as blockchain, digital asset and digital commodity, in order to avoid confusion.
- Splits oversight between SEC and CFTC: Assigns regulatory roles based on how a digital asset is used. For instance, SEC handles investment offerings (e.g., tokens initially offered as part of investment contracts), CFTC handles commodities and trading (e.g., if a token is decentralized and used primarily for utility or exchange).
- Creates “investment contract assets”: Allows certain tokens that started as securities to later be treated as commodities if they become decentralized.
- Requires crypto businesses to register: Exchanges, brokers and dealers dealing with digital commodities must register with the CFTC or risk penalties.
- Allows limited fundraising without SEC registration: Projects can raise up to $75 million annually under disclosure requirements if their blockchain aims to become decentralized.
- Defines mature blockchain systems: A blockchain is considered mature if no single person or group controls it, enabling lighter regulation.
- Protects self-custody rights: Individuals are guaranteed the right to hold and use digital assets in their own wallets without needing a bank or intermediary.
- Requires ongoing project disclosures: Issuers must share regular updates about blockchain development, token supply, financials, and project risks.
- Establishes delisting rules for unsafe tokens: The SEC and CFTC will…
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