U.S. House to Vote on CLARITY Act for Digital Asset Regulation

The U.S. House of Representatives is set to vote on the CLARITY Act and the GENIUS Act, two pieces of legislation aimed at clarifying the regulatory framework for digital assets. The CLARITY Act, also known as the Digital Asset Market Clarity Act of 2025, seeks to establish a comprehensive regulatory framework for digital assets, addressing years of regulatory ambiguity that has hindered innovation and left market participants navigating a fragmented and unclear regulatory landscape. By clearly delineating the oversight responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), the Act aims to foster responsible innovation, protect consumers, and cement the U.S.'s position as a global leader in the digital asset economy.

The CLARITY Act introduces tailored registration, compliance, and disclosure regimes aimed at enhancing market integrity and investor protection. It defines key terms related to blockchain technology, digital assets, and digital commodities, setting the foundation for clear jurisdictional boundaries between the SEC and CFTC. The Act also includes provisions that work in concert with the GENIUS Act, which addresses the issuance and custody of payment stablecoins and passed the Senate with bipartisan support.

The legislation arrives amid growing bipartisan consensus that digital assets are central to the future of payments, capital markets, and decentralized finance. The Act builds on the Financial Innovation and Technology for the 21st Century Act (FIT21), which passed the House in 2024 with bipartisan support. FIT21 laid the groundwork for progress in the digital asset space by defining digital asset categories and assigning regulatory roles to the SEC and CFTC. CLARITY expands and codifies those principles, introducing statutory definitions and operational rules for issuers, intermediaries, and exchanges involved in the issuance, custody, and trading of certain digital assets.

The CLARITY Act also includes provisions for the regulation of digital commodities, such as digital commodity brokers (DCBs), digital commodity dealers (DCDs), and digital commodity exchanges (DCEs). It requires the CFTC to establish a registration regime for these entities, with requirements resembling those adopted for swap dealers and designated contract markets. The Act also introduces the concept of a qualified digital asset custodian (QDAC) to hold digital assets on behalf of a person or customer of a person registered under CLARITY.

The Act grants the SEC anti-fraud authority over certain digital commodities and stablecoins, applying judicial precedent and promulgated rules related to securities fraud to transactions involving digital commodities and stablecoins. It also provides an anti-fraud framework and requirements for CFTC-SEC cooperation over new, dual-registered DCBs, DCDs, and DCEs. The CLARITY Act ensures that U.S. individuals retain the right to maintain hardware and software wallets for their own lawful custody of digital assets and engage in direct, peer-to-peer transactions using these wallets. It also excludes decentralized finance activities from SEC regulation, noting that these activities are not exempt from the SEC's anti-fraud and anti-manipulation enforcement authority.

The Act calls for various research studies related to cryptocurrency and blockchain technology, covering topics such as decentralized finance, non-fungible tokens (NFTs), financial literacy, and the use of blockchain technology by the private sector. It also addresses the risks posed by central intermediaries located in foreign jurisdictions and the use of digital assets by Foreign Terrorist Organizations and Transnational Criminal Syndicates.

Bipartisan support for the CLARITY Act appears to be growing, with expectations of up to 35 Democratic co-sponsors. This shift indicates a significant potential policy change aimed at enhancing investor protection and boosting market confidence. The potential bipartisan backing for these Acts highlights legislative support, signaling a crucial step for digital market policies. Leadership, including key committee members, have been vocal about the need for legislative guidance. As Representative French Hill, Chairman of the House Financial Services Committee stated, "I'm very pleased to see the House continue to advance its approach to a clear market structure for digital assets. I look forward to continued work on this important objective with Chairs Hill and Thompson and my colleagues here in the Senate."

Community and industry responses are largely awaited, given the potential impact on cryptocurrencies. Industry leaders have yet to publicly comment, but what unfolds today may lead to pivotal shifts in U.S. digital asset regulation. The CLARITY Act marks a significant development toward establishing a regulatory framework for digital assets in the United States. By establishing jurisdictional boundaries for the SEC and CFTC, introducing tailored registration and compliance regimes, and implementing new regulatory obligations for listing and trading practices, the Act seeks to foster responsible innovation while improving market integrity and investor protection. As Congress advances CLARITY alongside the GENIUS Act, stakeholders should prepare for new registration, compliance, and disclosure obligations, assess the current and anticipated maturity of their blockchain systems, and monitor forthcoming rulemakings and studies that will affect implementation.