Bipartisan Crypto Bill Redefines U.S. Digital Asset Oversight

On July 17, 2025, the U.S. House of Representatives passed the Digital Asset Market Structure Clarification Act, also known as the CLARITY Act, as part of a broader legislative initiative referred to as “Crypto Week.” This act, which received bipartisan support, aims to bring regulatory clarity to the digital asset market by defining the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in the oversight of crypto assets. The CLARITY Act is one of three major pieces of legislation introduced during this period, alongside the GENIUS Act and the Anti-CBDC Surveillance State Act.

The CLARITY Act seeks to classify digital assets based on their functional characteristics and establish a dual-agency regulatory framework. Digital commodities, such as Bitcoin and Ethereum, fall under CFTC oversight, while restricted digital assets, which resemble investment contracts or convey financial rights, remain under SEC jurisdiction. This distinction is intended to resolve longstanding conflicts over regulatory authority and provide a more predictable environment for market participants.

A key provision of the CLARITY Act is its creation of a certification pathway for token issuers to obtain clarity on whether their asset qualifies as a digital commodity or a restricted digital asset. Issuers may also self-certify and operate under provisional treatment, subject to agency review. Additionally, the bill introduces a $75 million annual exemption for digital commodity issuers who meet specific decentralization and disclosure criteria, allowing them to raise capital without triggering securities law registration requirements. This provision is expected to support early-stage decentralized projects while ensuring investor protections through transparency.

The act also mandates that digital commodity brokers, dealers, and trading platforms register with the CFTC and adhere to robust compliance standards. These include segregating customer and proprietary assets, maintaining fair trading and anti-manipulation systems, and ensuring accurate price transparency. The legislation extends similar requirements to intermediaries facilitating transactions in restricted digital assets, reinforcing the SEC’s existing oversight in this area.

Implementation of the CLARITY Act requires both the SEC and CFTC to issue final rules within 270 days of enactment. These rules will define the regulatory framework for the classification, offering, trading, and supervision of digital assets, and are intended to bring clarity to the current patchwork of regulatory approaches. The bill also establishes new CFTC registration categories for intermediaries involved in digital commodity trading, aligning with traditional market conduct and transparency rules.

Critics of the CLARITY Act, including former CFTC Chair Timothy Massad and Senator Elizabeth Warren, have raised concerns about the potential for regulatory confusion and the risks of reduced consumer protections. They argue that the bill could enable large corporations to sidestep investor protections by classifying their tokens as commodities. Additionally, consumer advocacy groups, such as the Americans for Financial Reform (AFR), have warned that the CLARITY Act may weaken SEC oversight and increase the prevalence of high-risk crypto products.

Despite these criticisms, the CLARITY Act represents a significant step toward creating a coherent and functional regulatory framework for U.S. digital asset markets. By clearly defining asset categories and assigning regulatory responsibilities to the SEC and CFTC, the act reduces legal uncertainty for issuers, developers, and intermediaries, while strengthening investor protections and market integrity. The legislation aligns the U.S. with other major jurisdictions that have introduced dedicated frameworks for digital assets, such as the EU’s Markets in Crypto-Assets Regulation (MiCA), Japan’s Financial Services Agency administered regime, and Singapore’s Payment Services Act.

The CLARITY Act is now expected to move to the Senate for further consideration and potential reconciliation with the Senate’s own legislative proposals. While the bill’s final passage remains uncertain, its impact on the digital asset industry is expected to be significant. Clearer regulatory categories and supervisory boundaries may reduce compliance uncertainty, encouraging more engagement from institutional actors and infrastructure providers. At the same time, emerging projects will need to navigate new disclosure, custody, and governance requirements, which could reshape development priorities and capital formation strategies.

As the CLARITY Act moves toward implementation, its success will depend heavily on how agencies translate the legislation into workable rules. The act’s emphasis on balancing innovation with market integrity and regulatory accountability could signal the beginning of a more coordinated federal approach to digital asset oversight. Its implementation will shape the U.S.’s future role in the global digital asset landscape and influence how digital currencies are integrated into the broader financial system.