The CLARITY Act, clarified.

The Digital Asset Market Clarity Act (H.R. 3633), “CLARITY” for short, is the first serious attempt to write a federal rulebook for the crypto market: who can issue a token, who can run an exchange, and which regulator is in charge.

For roughly six years the working U.S. rule was “regulation by enforcement”: no rulebook, just lawsuits. The SEC would tell you whether your token was a security after it sued you. Builders spent more time on legal structuring than on products, and many simply left the country.

CLARITY replaces sue-first with a filing-based system. It draws a line between two worlds: digital assets sold to raise money, which stay with the SEC under securities law, and “digital commodities” that trade on their own, which move to the CFTC. The bill runs to nine titles and more than 300 pages, because there is no single box to check that answers every legal question.

As of June 2026, CLARITY is closer to law than any market-structure bill before it, but it is not law yet. The House passed H.R. 3633 on July 17, 2025 by 294–134, a genuinely bipartisan margin. The very next day the President signed a different bill, the GENIUS Act on stablecoins (Section 03).

The action is now in the Senate, split across two committees: Banking handles the SEC and securities side, Agriculture handles the CFTC and commodities side. On May 14, 2026 the Senate Banking Committee advanced its version 15–9, with Democrats Ruben Gallego and Angela Alsobrooks crossing over; Agriculture advanced its companion on a party-line vote. The combined bill now sits on the Senate calendar.

Four things still have to happen. The two Senate drafts must be merged into one package. The full Senate must pass it, which takes 60 votes, so roughly seven Democrats have to join. The Senate and House versions must then be reconciled. And the President must sign. The White House has floated a July 4, 2026 target; read that as ambition, not a schedule.

These two bills are constantly confused, so here is the clean split. They are the two halves of Washington’s crypto agenda. GENIUS is narrow and done; CLARITY is broad and pending.

The GENIUS Act covers payment stablecoins only, the dollar-pegged tokens like USDC. It sets reserve, redemption and disclosure rules, and it became the first U.S. federal crypto law when the President signed it on July 18, 2025 (Senate 68–30, House 308–122).

CLARITY covers everything else: the market structure for non-stablecoin tokens, meaning the SEC/CFTC split, the digital-commodity definition, and registration for exchanges and brokers. The two were split on purpose. Stablecoins were the easier, consensus-ready piece and moved first, while the contentious turf war over the rest was carved into CLARITY. CLARITY’s definition of “digital commodity” expressly excludes stablecoins, so the two interlock without overlapping.

The one place they touch is yield (Section 09): a stablecoin issuer’s no-yield rule comes from GENIUS, while CLARITY extends a parallel rule to the exchanges and platforms that handle stablecoins.

CLARITY starts by sorting every digital asset into one of four buckets, because the same word, “token,” covers wildly different things. Payment stablecoins go to GENIUS. Tokenized stocks and bonds stay securities — a share does not stop being a share because it sits on a blockchain. NFTs get a safe harbor. Everything else, the tokens at the heart of the fight, are “digital commodities.”

Digital commodities themselves sit on a spectrum of decentralization, and CLARITY gives that spectrum three names. A network token is fully decentralized: its value rides on an open network no one controls, like Bitcoin. A security token carries a real financial right (debt, equity, or a share of profits) and is regulated like any security. In between sits the ancillary asset: a token whose value still depends on a founding team’s work.

The line that decides it is the “disqualifying financial right.” If a token gives you debt, equity or profit-sharing, it is a security token. Crucially, governance and voting rights, and value that simply rises and falls with the network, do not disqualify it, so genuinely useful tokens are not forced into securities law.

The whole framework turns on one question: is the blockchain decentralized enough to stand on its own? CLARITY answers it with the “mature blockchain system” test. A mature system is one that no single person or group controls. In practice, four things have to hold at once: the network is functional, its code is open-source, it runs on transparent and predictable rules, and no one party (counting affiliates acting together) controls it, including by holding 20% or more of the tokens.

That 20% line is the one to watch. It is a bright-line ceiling on concentration: cross it and you cannot claim maturity, no matter how good the rest looks. Most of today’s tokens fail somewhere on this test, usually because a founding team or foundation still holds a large allocation or keeps real control of the network.

Maturity is not a one-time trophy. If a network re-concentrates, a holder crosses the line or the team takes back control, the status can be lost and the obligations switch back on. Decentralization is a covenant you have to keep, not a box you check once.

So how does a token actually travel from “SEC, restricted” to “CFTC, freely trading”? CLARITY builds an on-ramp with hard steps and deadlines, replacing the open-ended SEC dance with a process you can plan around.

It starts with raising money. A new exemption nicknamed “Regulation Crypto” lets a project sell tokens to the public without a full securities registration, capped at $75 million over any 12 months, with no single buyer taking more than 10% and lockups that keep insiders holding until the network actually decentralizes. From there the issuer files disclosures, before selling and never after, and updates them twice a year.

The payoff is certification. When the team can certify that it is no longer doing “more than nominal” work to prop up the token’s value, and that all material information is already public, it files with the SEC. The SEC then has a short window to object, a denial takes a vote of the full Commission rather than a single staffer, and silence past the deadline means the certification is deemed granted. The token becomes a digital commodity under the CFTC. Step through the path below.

After CLARITY, the two-cop system finally has clear beats. The SEC keeps the capital-raising end: token sales that look like investment contracts, the disclosures behind them, and anything that is genuinely a security. The CFTC gets the spot market for digital commodities, the actual buying and selling of mature-network tokens, plus the exchanges that host it.

That last part closes the gap that drove years of litigation. The CFTC has always policed crypto derivatives, but no one had clear authority over spot exchanges trading the asset itself. CLARITY gives exchanges a real path: register with the CFTC as a digital-commodity venue, instead of being told, after the fact, that they should have registered with the SEC.

For an ancillary asset the two overlap by design: the token trades as a commodity under the CFTC, but when the founding team sells its own holdings, those specific sales are treated as a securities distribution under the SEC. The asset is a commodity; the insiders’ sales are the regulated event.

CLARITY is not a free pass, and it is careful about the parts of crypto that have no company at the center. Three of its nine titles deal with these edges.

For DeFi, the bill tries to separate genuinely decentralized protocols from ones that are “decentralized in name only,” where a small group can still change the code or restrict access. Truly permissionless, neutral software is protected; anyone keeping real control gets captured. For developers, a companion provision (the Blockchain Regulatory Certainty Act) clarifies that writing and publishing non-custodial software is not, by itself, running a money-transmitting business.

None of this touches the criminal law. The illicit-finance title keeps the Bank Secrecy Act and sanctions rules fully in force, and developers who actually conspire to launder money are still on the hook. The message is consistent: build openly and you are protected; hide control or help criminals and you are not.

Two issues did most to slow the bill down. One is largely resolved; the other is the reason it has not passed.

Yield was the first battleground. The banking lobby did not want Americans earning interest just for parking money in stablecoins, so CLARITY bars exchanges and platforms from paying passive, deposit-like yield on payment stablecoins. But it carves out rewards you earn by doing something: transaction rebates, putting assets at risk to provide liquidity, or staking, validating and loyalty programs. The test is activity, not idleness. Most people consider this settled.

Ethics is the live wire. A bipartisan group insists the bill include conflict-of-interest guardrails for elected officials and senior staff: limits on issuing or profiting from tokens, extending to spouses and children, and pointedly to the President’s family. The open questions are who is covered (Congress easily, the President more controversially), who enforces it, and from when. A likely compromise delays the rules so they do not apply retroactively to the current administration. One key senator put the deal “at the 99-yard line.” That last yard is what is left.

Strip away the section numbers and a short playbook falls out. If you are issuing a token from the U.S. under CLARITY, a few rules will shape every decision.

Disclose before you sell: the duty attaches before the first sale, including the first secondary-market sale. Consider pre-launch certification to fix your status from day one. Plan for lockups if you use the Regulation Crypto raise, and remember the new co-originator rule: you cannot dodge liability by routing the issuance through an offshore shell and handing the tokens to someone else. Aim, over time, to look like a network rather than a business. Once you certify out, the expensive disclosure machine switches off.

And do not forget tax. Unlike raising money through debt or equity, selling tokens is a taxable event in the U.S.: raise $100 and you may keep around $80 after tax. It is viable, just suboptimal, and worth modeling before you choose to launch onshore.

Disclaimer

This longread is for informational purposes only and does not constitute legal advice. The CLARITY Act is still moving through Congress; section numbers, thresholds and timing reflect the versions current as of the date above and will change before any final law. Token regulation is fact-specific. For advice on a particular transaction or token offering, please contact Buzko Krasnov directly.