The CLARITY Act has become one of the most closely watched crypto bills in Washington because it targets a question that has hung over the industry for more than a decade: whether a token falls under the SEC or the CFTC. For years, the answer often emerged only through lawsuits, enforcement actions, and conflicting court decisions. That uncertainty shaped how exchanges listed assets, how projects launched tokens, and why some crypto firms moved operations outside the United States.
Formally titled the Digital Asset Market Clarity Act, the bill is designed to replace regulation by enforcement with rules written into statute. According to the source material, it passed the U.S. House of Representatives in July 2025 with broad bipartisan support and cleared a key Senate committee in May 2026. That places it closer to becoming law than any previous U.S. crypto market structure bill described in the source.
Three buckets for digital assets
The center of the bill is a classification system that sorts digital assets into three categories. The first is digital commodities, which would fall under CFTC oversight. These are tokens tied to sufficiently decentralized blockchain networks, with real utility inside their ecosystems and no central group controlling the network. Bitcoin is presented in the source as the clearest example.
The second category is investment contract assets, which would remain under SEC oversight. These are tokens sold as investments, usually in fundraising sales where buyers expect value to come from the work of a project team. The third category is permitted payment stablecoins. Instead of forcing stablecoins into either the securities or commodities framework, the bill creates a separate regulatory track for them.
That structure is meant to give market participants a legal test up front. Rather than waiting for courts or regulators to define a token after the fact, the bill would assign a clearer framework based on how the asset functions.
A maturity pathway from SEC to CFTC
One of the bill’s most notable features is its recognition that a token can change over time. Many crypto networks begin with a centralized team raising capital, which looks much closer to a securities offering. Later, if the network becomes decentralized and the token gains real use inside the ecosystem, the original label may no longer fit.
The CLARITY Act addresses that shift through the concept of blockchain maturity. A project could begin as an investment contract asset under SEC rules and later apply to move into the digital commodity category once its network meets a defined decentralization and utility threshold. In practical terms, the bill creates a legal route for a token to move from SEC oversight to CFTC oversight as the network matures.
This is a major design choice. It avoids treating a token’s status as permanently fixed on day one and instead tries to match regulation with how crypto networks actually evolve.
Consumer protection provisions are a major part of the bill
The source also makes clear that the bill is not only about agency turf. It includes operational standards for brokers, dealers, and exchanges that are aimed at failures seen in past crypto collapses. One of the clearest requirements is segregation of customer funds, keeping user assets separate from company money rather than allowing firms to mix the two.
The bill would also require disclosure of conflicts of interest and impose standards around custody, asset safeguarding, and broader compliance and disclosure practices. In the source, legal experts are described as viewing these sections as among the bill’s stronger features because they target the kinds of breakdowns that harmed users when major crypto firms failed.
From legal gray zone to written rules
For the U.S. crypto industry, the larger significance of the CLARITY Act is that it tries to move basic market structure questions out of case-by-case enforcement and into legislation. The bill is written to define when a token is treated as a commodity, when it is treated as a security, which regulator oversees the trading venue, and what protections users should receive.
That is why the proposal is described in the source as one of the most important pieces of crypto legislation in U.S. history. Its aim is straightforward: end the long-running gray zone around digital asset regulation and replace it with a framework that projects, exchanges, and holders can understand before disputes begin.