U.S. House Passes GENIUS Act, CLARITY Act for DeFi Regulation

The U.S. House of Representatives has made significant strides in embracing decentralized finance (DeFi) through amendments to the GENIUS Act and the CLARITY Act. These legislative actions aim to provide clear regulatory guidelines for stablecoins, which are cryptocurrencies designed to maintain a stable value, often pegged to a reserve asset like the U.S. dollar. The GENIUS Act, officially named the Guaranteeing the Economy through National Innovation in U.S. Stablecoins Act, was passed with bipartisan support and signed into law by President Donald Trump. This legislation is anticipated to drive the adoption of stablecoins in retail and eCommerce, potentially opening new revenue streams for various industries.

The GENIUS Act introduces immediate changes by offering legal clarity for stablecoins, which could transform them into a multitrillion-dollar industry. This regulatory framework is essential for stablecoins, which currently constitute a $200 billion segment of the broader cryptocurrency ecosystem. By setting clear guidelines, the act aims to foster innovation and growth in the DeFi sector, making it more accessible and reliable for both consumers and businesses.

The CLARITY Act, on the other hand, focuses on providing regulatory clarity for other aspects of the cryptocurrency market. Together, these two acts represent a comprehensive approach to integrating DeFi into the mainstream financial system. The amendments to these acts are designed to address the unique challenges and opportunities presented by decentralized finance, ensuring that the U.S. remains at the forefront of financial innovation.

The passage of these acts is a significant milestone in the U.S. administration's efforts to establish the country as a leader in the global cryptocurrency landscape. By embracing DeFi, the U.S. aims to create a more efficient, transparent, and inclusive financial system. The regulatory clarity provided by the GENIUS and CLARITY Acts is expected to attract more investors and businesses to the DeFi space, further driving its growth and development.

Importantly, the GENIUS Act focuses federal oversight on identifiable, custodial stablecoin issuers while leaving self-custodied wallets and other non-issuer onchain activity largely outside its scope. This approach makes way for broader market-structure rules that aim to distinguish decentralized protocols from centralized intermediaries. The House passed the CLARITY Act with key amendments that reversed last-minute language changes that had sparked outcry among DeFi builders and policy experts. The manager’s amendment from HFSC Chair French Hill and Attorney General Chair GT Thompson restored and clarified the DeFi carve-outs in both the securities and commodities titles of the bill.

The final House text now explicitly excludes activities like publishing code, operating frontends, running validator nodes, or providing wallets from registration requirements, so long as they don’t involve custody or control of user assets. The Commodity Exchange Act’s DeFi exclusion is once again broad enough to cover most non-custodial spot-market activity. On the House floor, Rep. Hill stated: “DeFi developers do not take custody of user assets, nor do they control user assets. Therefore, we should not treat them in the same way we treat centralized actors.” Rep. Thompson added: “Congress is making an unambiguous statement that DeFi is different.”

These articulations of Congress’ intent are important, but two gaps remain. First, the carve-outs do not extend to derivatives, leaving DeFi derivatives protocols in legal limbo. Second, the CLARITY Act lacks federal pre-emption, meaning state regulators could still impose conflicting requirements. However, the Hill-Thompson fix moves CLARITY away from being a potential threat and into the category of a qualified win for DeFi. DeFi tokens have rallied, institutional interest is robust and the total crypto market cap crossed $4 trillion. “This regulatory milestone establishes the US as a key jurisdiction for digital assets,” said Fabian Dori, CIO at Sygnum Bank. “Clear rules on stablecoins and token classification unlock institutional participation at scale.”

Washington is no longer just watching onchain finance — it’s actively protecting it. The U.S. House of Representatives' amendments to the GENIUS and CLARITY Acts mark a pivotal moment in the country's embrace of decentralized finance. These legislative moves provide much-needed regulatory clarity for stablecoins and other cryptocurrencies, paving the way for their widespread adoption and integration into the mainstream financial system. The acts are expected to foster innovation, drive growth, and position the U.S. as a global leader in the DeFi sector.