Congress Grapples With CLARITY Act To Overhaul US Crypto Market Rules

Lawmakers in Washington are locked in debate over the CLARITY Act, a landmark crypto market structure bill that could reshape how digital assets are regulated in the United States. The legislation — formally titled the Crypto Legal Accountability, Registration, and Transparency for Investors Act (CLARITY) — seeks to define which crypto assets are securities, establish jurisdictional boundaries between federal regulators, and impose new consumer protections on exchanges and issuers.

According to CoinDesk, the CLARITY Act passed the House of Representatives earlier this month by a bipartisan margin of 308 to 122, reflecting a growing consensus in Congress that the U.S. needs clearer rules for the rapidly growing crypto sector. The bill would, for the first time, create statutory definitions for different classes of digital assets — distinguishing between digital commodities, digital securities, and payment tokens — and allocate oversight authority accordingly between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

CoinDesk reported that the legislation also directs the SEC to establish a new registration framework tailored for digital asset issuers and mandates enhanced disclosure standards for crypto exchanges. It further calls for federal custody and safeguarding rules to protect consumer assets held on trading platforms — provisions that lawmakers say could have prevented major collapses like FTX in 2022.

As reported by Politico, the bill's momentum has slowed as it enters the Senate, where several influential lawmakers are pushing for revisions. Some Senate Banking Committee members want stricter investor protection rules, while others — particularly on the Senate Agriculture Committee — favor giving the CFTC broader jurisdiction over spot crypto markets. Politico noted that Senate staff have been drafting their own competing framework, raising the possibility that the final legislation may merge elements from both chambers or be renamed entirely.

Industry groups are closely watching the negotiations. The Blockchain Association and Chamber of Digital Commerce have urged Congress to move quickly, warning that regulatory uncertainty is pushing innovation and investment offshore. "Without clear federal rules, the U.S. risks ceding leadership in digital finance to Europe and Asia," said Kristin Smith, CEO of the Blockchain Association, in comments reported by Politico.

Critics, however, worry the bill could entrench the dominance of large incumbents at the expense of startups, by imposing heavy compliance costs. Some consumer advocacy groups also argue it does not go far enough on anti-money laundering and fraud prevention.

If passed, the CLARITY Act would be the most comprehensive crypto legislation ever enacted in the U.S., potentially ending years of regulatory ambiguity — and signaling that Washington intends to integrate digital assets into the broader financial system rather than shut them out.