House Passes CLARITY Act 294-134 Defining Crypto Regulation

The US House of Representatives on Thursday passed the CLARITY Act, a comprehensive market structure bill aimed at ending years of regulatory uncertainty around digital assets. The bill progressed through the House with a 294–134 vote and is set to be reviewed by the Senate. The legislation seeks to define jurisdictional boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in regulating crypto assets. Key provisions include standardized registration requirements, disclosure obligations, delisting rules for noncompliant assets, and investor protection mechanisms. The legislation also creates pathways for capital formation, recognizes decentralized blockchain networks, and protects users’ rights to self-custody digital assets.

Crypto community members and industry advocates see the CLARITY Act as foundational for trust, market stability, and institutional adoption of crypto assets. “The CLARITY Act will clarify SEC/CFTC roles, classifying assets as ‘digital commodities’ or ‘investment contract assets,’ which might encourage retail and institutional investors to allocate more aggressively, viewing crypto as a mature asset class rather than a regulatory minefield,” said James Harris, Tesseract Group CEO, in a statement. The CLARITY Act gained bipartisan approval in the House, reflecting a growing consensus around the need for federal crypto regulation.

The passage of the CLARITY Act comes after a tumultuous week in the House, where conservatives initially stalled the legislative process. A group of right-wing Republicans sought to merge the CLARITY Act with the controversial Anti-Central Bank Digital Currency Surveillance State Act, which aims to prohibit the Federal Reserve from issuing a central bank digital currency. This move was met with opposition from those who drafted the legislation, as it would have delayed the process and sent the bill back to the Senate. The standoff was eventually resolved late Wednesday when a deal was struck to tie the ban on a central bank digital currency with the must-pass annual defense reauthorization bill. This allowed the legislative process to move forward, and the House was able to pass the CLARITY Act along with two other crypto bills.

The Senate had previously approved a bipartisan stablecoin bill, known as the GENIUS Act, last month. However, the bill faced criticism from Democratic lawmakers who expressed concerns about the potential for corruption and foreign influence, as well as the lack of strong consumer protections. Despite these criticisms, supporters of the legislation argue that regulations are long overdue and that the measure, while imperfect, provides a necessary framework for the industry. The passage of the CLARITY Act in the House represents a significant step forward in the regulation of the cryptocurrency market. The bill's advancement to the Senate brings the industry one step closer to having a clear regulatory framework, which is essential for its continued growth and development. As the Senate considers the bill, stakeholders in the cryptocurrency industry will be closely watching to see how the legislation evolves and what impact it will have on the market.