CLARITY vs. RFIA: Showdown Over U.S. Crypto Regulation's Future

Rep. Bryan Steil (R-Wis.) has reaffirmed that the Digital Asset Market Clarity Act (CLARITY Act), a key legislative effort to establish a regulatory framework for digital commodities, remains on track despite the partial U.S. government shutdown. The House passed the CLARITY Act in July with bipartisan support, but its path to enactment has faced complications as the Senate Banking Committee advances an alternative bill, the Responsible Financial Innovation Act (RFIA), which introduces distinct definitions and regulatory approachesThe Clarity Act is Probably Dead: Here's What's Next for Its^[2]. Steil, a vocal proponent of the CLARITY Act, emphasized that the bill's core objective-to clarify jurisdictional boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)-remains a priority for House leadershipH.R.3633 - Digital Asset Market Clarity Act of 2025^[1].

The CLARITY Act seeks to classify digital assets into three categories: digital commodities, investment contract assets, and permitted payment stablecoins. Under the bill, the CFTC would regulate digital commodities, defined as blockchain-linked assets whose value is tied to the functionality of the network, while the SEC would oversee investment contract assets, such as tokens sold in capital-raising efforts. This framework aims to reduce regulatory ambiguity and prevent enforcement-driven oversight, a criticism levied against the SEC's current approachClarifying the CLARITY Act: What To Know About the …^[3]. The Senate's RFIA, however, proposes a broader focus on the SEC's authority, introducing a new category of "ancillary assets" and delaying CFTC jurisdictional expansionUpdate on Crypto Market Structure Legislation: Senate Banking …^[4].

Legislative hurdles persist as the Senate navigates its own version of the bill. The Senate Banking Committee has prioritized defining "investment contracts" through a rulemaking process, diverging from the CLARITY Act's structured classification systemUpdate on Crypto Market Structure Legislation: Senate Banking …^[4]. Meanwhile, the Senate Agriculture Committee, which oversees the CFTC, has yet to finalize its draft language for commodity-related provisions. Bipartisan negotiations are expected to reconcile these differences before a unified bill can advance to the Senate floor. Senator Cynthia Lummis (R-Wyo.), a leading figure in Senate crypto policy, has stated that her office remains "full steam ahead" in advancing market structure legislation, despite the shutdownFull Steam Ahead: Lummis Drives Crypto Market …^[5].

The government shutdown has created operational challenges for federal agencies, including the SEC and CFTC, but legislative staff continue working on bill details. Summer Mersinger of the Blockchain Association noted that the shutdown could paradoxically accelerate progress by reducing congressional distractions, allowing staff to focus on refining complex provisionsFull Steam Ahead: Lummis Drives Crypto Market …^[5]. However, the shutdown has delayed key regulatory actions, such as approvals for crypto ETFs, and raised concerns about the timeline for finalizing market structure legislation before the 2026 midtermsU.S. Government Shutdown Delays Crypto Market Structure Bill ...^[6].

If enacted, the CLARITY Act would require years of rulemaking by the SEC and CFTC to implement its framework. Agencies would need to address issues such as blockchain custody standards, anti-money laundering compliance, and definitions for "mature" blockchains, which determine when tokens transition from securities to commoditiesClarifying the CLARITY Act: What To Know About the …^[3]. Critics argue that the bill's reliance on agency discretion could prolong regulatory uncertainty, while proponents highlight its potential to position the U.S. as a global leader in crypto innovationClarifying the CLARITY Act: What To Know About the …^[3].

The final form of the legislation remains contingent on Senate negotiations, agency coordination, and political dynamics. With the Senate Banking Committee aiming to complete its work by year-end and the House already supportive of the CLARITY Act's principles, the bill's eventual passage could mark a turning point for U.S. digital asset marketsThe Clarity Act is Probably Dead: Here's What's Next for Its^[2]. However, delays in implementation-common in complex financial regulations-mean meaningful regulatory clarity may not materialize until 2026 or laterThe Clarity Act is Probably Dead: Here's What's Next for Its^[2].