The CLARITY Act Explained: What the US Crypto Market Structure Bill Does

The CLARITY Act, formally the Digital Asset Market Clarity Act of 2025, is a US bill (H.R. 3633) that would decide which regulator, the SEC or the CFTC, oversees each kind of crypto asset, and it would set registration rules for exchanges, brokers and dealers. The House passed it 294-134 on 17 July 2025, but a Senate cloture vote failed 49-50 on 15 September 2026, so as of 12 November 2026 it is not law. Nothing changes for users today; the bill matters because it sets out the framework a future US crypto regime would most likely follow.

What is the CLARITY Act?

The CLARITY Act is a market-structure bill that would give the US its first federal rules for digital assets, classifying tokens and deciding whether the SEC or the CFTC regulates them. It was introduced by Representatives French Hill and Glenn Thompson as H.R. 3633, and it creates registration rules for exchanges, brokers, dealers and custodians. It passed the House in 2025 but has not become law.

Congress has never passed a law that says, in general terms, which crypto assets are securities and which are commodities. The SEC has argued for years that many tokens are securities under the Howey test, an approach it pushes through lawsuits, while the CFTC has treated bitcoin and some other assets as commodities. The CLARITY Act is an attempt to write that division into statute, which is the gap a crypto exchange customer indirectly feels every time a token’s legal status is unclear.

The bill uses three main categories. A digital commodity is a fungible digital asset recorded on a distributed ledger whose value is intrinsically linked to use of the blockchain, and which can be held and transferred without an intermediary. A network token, called an investment contract asset in the House version, is a token that began as an investment contract but is meant to become a commodity as its network matures. A permitted payment stablecoin is a stablecoin issued under the separate GENIUS Act. Securities, derivatives and stablecoins are excluded from the digital commodity definition, according to the bill text.

A decentralised governance system is a transparent, rules-based system that no single person or group effectively controls. That definition matters because it is part of what lets a token mature out of securities treatment and into commodity treatment.

Congress chose to do stablecoins first. The GENIUS Act, which regulates payment stablecoin issuers, was signed into law on 18 July 2025, one day after the House passed the CLARITY Act. Market structure, deciding which agency regulates bitcoin, ether and thousands of other tokens, is the larger and more contested piece, and it is still unresolved.

The bill does not make any coin legal tender, does not create a central bank digital currency and does not change how crypto is taxed. It also does not resolve the SEC’s existing enforcement cases, which would continue separately in court. Its scope is market structure and registration.

How would the CLARITY Act split the SEC and the CFTC?

The bill would give the CFTC exclusive jurisdiction over cash and spot sales of digital commodities, while the SEC would keep authority over securities, tokenised securities and primary-market token offerings. In practice, most everyday spot trading of crypto would move under the CFTC, and the SEC would focus on fundraising and on fraud through SEC-registered platforms.

Under the bill, a digital commodity exchange, broker or dealer would register with the CFTC. The CFTC would gain rules on listing standards, customer-fund segregation, conflict-of-interest controls and record-keeping. The SEC would retain jurisdiction over the initial sale of a token that is still an investment contract, plus anti-fraud authority where trading happens through SEC-registered brokers, dealers or exchanges.

The SEC side of the deal is an offering exemption. The House-passed bill created a Securities Act section 4(a)(8) exemption that lets a US issuer raise up to $75 million over 12 months by selling tokens, as long as no purchaser takes more than 10% of the supply in a single offering and the issuer files an offering statement. The Congressional Research Service states that threshold in its overview of the House version. The September 2026 Senate draft, released by Senator Cynthia Lummis, replaces this with a “Regulation Crypto” regime under which originators could raise up to $200 million, according to the CRS overview of that draft.

The bill also sets out a path for a token to mature. A blockchain system can be treated as mature when its value is substantially derived from use of the network, no person or group controls 20% or more of the tokens, and no one is effectively in charge. Once an asset is a mature digital commodity, its spot market falls to the CFTC rather than the SEC.

In everyday terms, the split means an asset like bitcoin, whose value comes from its network rather than from a company’s promises, would be a digital commodity under the CFTC. A token sold by a startup to fund its project would start under the SEC and, if its network matures, could move to the CFTC. That transition from security to commodity is the mechanism the bill builds around.

The bill reaches anti-money-laundering and decentralised finance too. Digital commodity brokers, dealers and exchanges would become financial institutions under the Bank Secrecy Act, with customer identification, record-keeping and suspicious-activity reporting. At the same time, the Senate draft shields some network operators and non-controlling developers from securities and commodities liability and protects self-custody, borrowing ideas from the Blockchain Regulatory Certainty Act and the Keep Your Coins Act.

The two agencies would also have to write shared rules on a clock. The bill sets a 180-day deadline for joint delisting rules, 270 days for custody and ancillary staking rules, and 360 days for portfolio-margining and capital rules. The split only works if the SEC and CFTC can agree on definitions such as coordinated control at the boundary between the two regimes.

What does the CLARITY Act mean for crypto exchanges?

If the bill became law, US digital-commodity exchanges, brokers and dealers would register with the CFTC instead of operating only under a patchwork of state money-transmitter licences. They would face customer-fund segregation, listing standards, conflict-of-interest rules and Bank Secrecy Act duties such as customer identification and suspicious-activity reporting. None of this is in force today because the bill has not passed.

The bill directs the CFTC to adopt an expedited registration process within 180 days of enactment, and says an entity may not keep operating more than 90 days after that process is adopted unless it is registered. Provisional registration would carry firms through a transition period of up to 270 days after the relevant CFTC rules take effect.

Customer protection is central to the framework. Digital commodity exchanges would have to segregate customer assets, and bankruptcy law would be amended so that holders of digital assets are treated as customers, which changes who gets paid first if a platform fails. Crypto ATMs get specific treatment too: kiosk operators would have to register, keep locations updated and honour a 72-hour hold and refund window for first-time or suspicious transactions.

For US users this would be a change from today, where firms rely on state licences and the SEC’s enforcement posture. The biggest open question is capacity: the CFTC is much smaller than the SEC, and former CFTC officials and investor advocates have argued it is not funded or staffed to supervise a national spot crypto market. That criticism, along with concerns about weaker investor protections, has been central to Democratic opposition.

This is also why keeping crypto on an exchange and proof of reserves remain worth understanding: whatever the regulator, customer-asset safeguards matter most when a platform is in trouble.

For users outside the United States the bill changes nothing directly. A platform serving US customers would need CFTC registration, but local regimes, including MiCA in the European Union, continue to govern customers there. US users would, for the first time, have a single federal registration standard to look for rather than a list of state licences.

What does the CLARITY Act say about stablecoins?

Stablecoin issuers are already covered by the GENIUS Act (P.L. 119-27), signed into law on 18 July 2025, which bars issuers from paying interest to holders. The CLARITY Act extends that idea to third parties such as exchanges, targeting deposit-like yield on payment stablecoins. Banking trade groups pushed back, arguing loose yield rules could drain deposits from community banks.

The GENIUS Act defines a payment stablecoin as a digital asset issued for payment or settlement that is redeemable at a fixed amount, and it requires issuers to hold at least $1 in permitted reserves for each $1 of tokens. It gives issuers a choice between a federal route, through the Fed or the OCC, and a state route for smaller issuers under $10 billion in outstanding tokens. The CRS overview of the GENIUS Act notes that payment stablecoins are neither securities nor commodities and are not federally insured. The CLARITY Act does not replace the GENIUS Act; it governs how stablecoins sit inside the wider market-structure framework.

The contested part is stablecoin yield. The House and Senate drafts would stop third parties, not just issuers, from offering interest or yield on payment stablecoins that is economically equivalent to deposit interest, while allowing rewards tied to genuine transactions. The American Bankers Association, the Independent Community Bankers of America and 76 state banking associations told Senate leaders in July 2026 that the wording in Section 404 was too loose and could let stablecoins become deposit substitutes, reducing the funding community banks use for mortgages and small-business loans, as reported by The Block. The CRS notes the Senate draft lets the Treasury act within 18 months if stablecoin yield causes substantial harm to community-bank deposits. If you hold USDC, USDT or DAI, these are the rules that already touch your holdings.

How is the CLARITY Act different from the GENIUS Act and EU MiCA?

The three frameworks are often confused. The CLARITY Act is a US market-structure bill for spot crypto trading that is not yet law; the GENIUS Act is a US law covering only payment stablecoins; and MiCA is the European Union’s broad crypto-asset regime, in force across the EU. They differ in scope, lead regulator and legal status.

MiCA is the licensing regime in the EU. It requires crypto-asset service providers to be authorised by a national competent authority, with ESMA coordinating supervision and keeping the public register of compliant and non-compliant firms, as set out on the ESMA MiCA page. The CLARITY Act is a different model: instead of a licence for everyone, it splits the market between two US agencies. Our MiCA explainer covers the EU framework in more detail.

Because the GENIUS Act is already law, stablecoin issuers are already subject to its reserve and redemption rules, while the CLARITY Act’s exchange and registration rules are still only proposals. That is the practical difference for a user comparing the three.

What is the current status of the CLARITY Act?

As of 12 November 2026, the CLARITY Act has not become law. The House passed it 294-134 on 17 July 2025, and the Senate Banking Committee advanced it 15-9 on 14 May 2026, but a Senate cloture vote failed 49-50 on 15 September 2026, short of the 60 votes needed to end debate. A motion to reconsider was filed, and no further floor vote is scheduled.

A failed cloture vote is procedural, not a vote on the substance. It means senators could not agree to end debate, so the bill stalled before a final vote. If the 119th Congress ends without passage, the bill must be reintroduced in the next Congress. There is no reliable way to predict whether that happens or what a final text would look like, and this page is not investment advice.

A motion to reconsider keeps the procedural door open, but it is not a scheduled vote and does not itself move the bill. The status above reflects the public record as it stood when this page was written.

What should users do now?

Nothing changes for you today. The CLARITY Act is not law, so your exchange’s terms, state money-transmitter rules and the SEC’s current enforcement approach all still apply. You can verify the bill’s status yourself, and you should keep using ordinary safety practices. Crypto assets are volatile, and this is not financial advice.

To check the bill yourself, open the Congress.gov page for H.R. 3633 and read the Actions tab, or use GovTrack. Look for two markers: the House passage on 17 July 2025 and the failed cloture vote on 15 September 2026. The status shown on those pages, not a headline or a social post, is what tells you whether the bill has actually moved.

1. Keep using regulated exchanges for now; the CLARITY Act does not change any exchange’s current obligations. Start with how to choose an exchange and whether to keep crypto on an exchange.
2. If you hold stablecoins, understand the GENIUS Act rules that already apply to issuers, and compare USDC, USDT and DAI.
3. Ignore anyone who claims the bill has “passed” or that a specific coin will be reclassified imminently. Scams and phishing tend to spike around big crypto news, so never share a seed phrase (see how to store a seed phrase) and watch for withdrawal-code text scams.
4. If you are in the EU, MiCA already applies; the US bill is a separate regime. If you prefer regulated exposure through a brokerage account, spot bitcoin ETFs are an already-approved product under existing securities rules.

Even if a future Congress passed the bill, the rules would not change overnight. The bill gives the CFTC and SEC months to write implementing rules, and existing registrations would continue through transition periods. The practical takeaway is that no action is required from you today and no deadline applies to you.