CLARITY Act

The Digital Asset Market Clarity Act, or CLARITY Act, is a bill in the United States Congress, H.R. 3633 of the 119th Congress, that would set up a federal framework for the trading of crypto assets other than payment stablecoins. It is not law. The House of Representatives passed it on 17 July 2025, but the Senate has not: on 15 September 2026 a vote to begin debate failed by 49 to 50, short of the 60 votes needed.¹² The bill would divide authority over crypto markets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), exempt many decentralised-finance activities from registration, and, in the Senate Banking text, ban payments on stablecoin balances that work like bank interest. As of October 2026, the sources opened for this article report no further floor vote.³²

BackgroundReport an error

Before the bill, no federal statute said which crypto assets are securities and which are commodities. The House had tried to answer that in the previous Congress. It passed the Financial Innovation and Technology for the 21st Century Act (FIT21), H.R. 4763, on 22 May 2024 by 279 to 136, with 71 Democrats voting yes.⁴ EY describes FIT21 as a similar bill to the CLARITY Act.⁵

Stablecoins were handled in a separate bill, the GENIUS Act. Because House Financial Services Republicans accepted the Senate's stablecoin bill unchanged, the House-passed CLARITY Act included provisions that would reopen that law, on nonfinancial issuers, commodity-backed stablecoins and issuer accounting.⁵

Legislative historyReport an error

House

Rep. French Hill of Arkansas, who chairs the House Financial Services Committee, introduced H.R. 3633 on 29 May 2025. The original cosponsors included Glenn Thompson of Pennsylvania, who chairs the Agriculture Committee, and Reps. Craig, Emmer, Johnson of South Dakota, Davis of North Carolina, Steil, Torres and Davidson. The bill was referred to both committees.⁶⁷

Both committees marked it up on 10 June 2025. Agriculture approved it 47 to 6. Financial Services, whose markup ran longer, advanced it 32 to 19.⁸⁷ Democrats offered amendments to bar the president and his family from profiting from crypto ventures and to block taxpayer bailouts of token issuers; both were voted down in the Financial Services markup, according to Decrypt. Hill said at the markup that "It's not an ethics bill".⁸

On the floor, conservative Republicans blocked the rule for debate on 15 and 16 July 2025, in a vote held open for nine hours. Leaders then agreed to attach a separate bill barring a central bank digital currency to the annual defence authorisation bill.⁵ The House passed H.R. 3633 on 17 July 2025 by 294 to 134. All 216 Republicans who voted supported it, as did 78 Democrats; 134 Democrats opposed it.¹ The House-passed text includes a title on central bank digital currency, the Anti-CBDC Surveillance State Act.⁹ Maxine Waters, the ranking Democrat on Financial Services, called the bill the "CALAMITY Act".⁵

The bill reached the Senate on 18 September 2025 and was referred to the Banking Committee.¹⁰

Senate committees

The Senate split the subject between two committees. The Agriculture Committee, which has jurisdiction over the CFTC, advanced its own bill, the Digital Commodity Intermediaries Act, 12 to 11 along party lines on 29 January 2026. Chair John Boozman called it the first step. Democrats objected that it lacked limits on federal officials issuing or endorsing digital assets and safeguards against fraud and crime.¹¹ The Congressional Research Service (CRS) lists it as S. 3755, reported on 2 February 2026.¹²

The Banking Committee, which has jurisdiction over the SEC, stalled over stablecoin interest. On 1 May 2026 draft text emerged from talks between Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD), which the White House helped facilitate. It banned stablecoin yield tied solely to holding but allowed rewards tied to bona fide activity. Coinbase's chief legal officer, Paul Grewal, said the language "preserves activity-based rewards tied to real participation on crypto platforms and networks".¹³

The Banking Committee advanced the bill 15 to 9 on 14 May 2026. All 13 Republicans and two Democrats, Ruben Gallego and Angela Alsobrooks, voted yes, and nine Democrats voted no. More than 100 amendments were proposed. A Van Hollen amendment on Trump family conflicts of interest failed, with all 13 Republicans opposed.¹⁴ The committee's reporting date was 1 June 2026, when Senator Tim Scott reported H.R. 3633 with an amendment that struck the House text and substituted a different one.¹⁰

Senate floor

The Agriculture and Banking texts had to be combined before floor action. Negotiations over an ethics provision became the main obstacle. On 22 July 2026, seven Senate Democrats said the Republican proposal "falls short". Alsobrooks said she "absolutely will not support" floor legislation without ethics provisions.¹⁵ Republicans posted a revised substitute on 10 September 2026 that added CFTC registration and Bank Secrecy Act obligations for trading protocols that are not decentralised.¹⁶ Sen. Cynthia Lummis published combined text on 14 September, merging the Banking and Agriculture texts.¹²

The Senate voted on cloture on the motion to proceed to H.R. 3633 on 15 September 2026. Cloture failed 49 to 50; it needed 60. All 49 votes in favour came from Republicans, and Republicans Susan Collins, Josh Hawley, Jerry Moran and Tillis voted no. The Defiant reported that Tillis voted no so that he could enter a motion to reconsider, which he did about a minute after the result.¹⁷ Because the vote concerned only the motion to proceed, the Senate never voted on the substance of the bill.²

Two days later, seven Democratic senators who had worked on the text, including Gallego, Gillibrand and Warner, called the result a setback "but not the end" and recommitted to a bipartisan deal, according to FinTech Weekly.² The Senate's work period ran from 5 October to 6 November, overlapping the 3 November midterm elections, and FinTech Weekly called a post-election lame-duck session the most plausible window for another attempt.² As of October 2026, none of the sources opened reports that a new vote has been scheduled, and the outcome of Tillis's motion is not reported.³²

ProvisionsReport an error

The House and Senate texts differ in structure and vocabulary. Provisions below are labelled by the version they come from: the House-passed text of 17 July 2025 (the engrossed bill), and the Banking Committee substitute reported in the Senate on 1 June 2026. The Agriculture Committee's bill and the September combined drafts are described only where a source opened for this article describes them.

Division of authority between the SEC and CFTC

House-passed text. The House bill defines a "digital commodity" as a digital asset intrinsically linked to a blockchain system and whose value is derived, or reasonably expected to be derived, from the use of that system. It excludes securities, including notes and investment contracts that give the holder a claim on the revenues, profits or assets of the issuer.⁹ The CFTC would have exclusive jurisdiction over spot-market transactions in digital commodities carried out on, or subject to the rules of, a registered entity or by a person registered with the CFTC. That jurisdiction would not cover bank custody activities or the offer and sale of an investment contract involving a digital commodity.⁹ Permitted payment stablecoins, defined by reference to the GENIUS Act, are removed from the CFTC's general commodity jurisdiction.⁹

The House bill treats an investment contract involving a digital commodity as separate from the digital commodity itself. It amends the securities laws so that "investment contract" does not include an "investment contract asset", and exempts certain primary sales by an issuer from registration. To use the exemption, the blockchain must be certified as mature or be intended to become mature within four years, the issuer may take in no more than US$50 million over 12 months (adjusted for inflation), and no purchaser may hold more than 10 per cent of the outstanding units.⁹ A further section would treat digital commodities as "covered securities", which preempts state securities registration while preserving state antifraud authority.⁹

Banking Committee substitute. The Senate Banking text builds the SEC's role around a different category, the "ancillary asset": a network token whose value depends on the entrepreneurial or managerial efforts of an originator or related person. Network tokens are treated as non-securities for the purposes of the securities laws. The SEC would write a "Regulation Crypto" with an exemption from registration for offerings of ancillary assets of up to the greater of US$50 million per calendar year for up to four years or 10 per cent of the outstanding supply, and an originator could raise no more than US$200 million in total under the exemption. Antifraud provisions would continue to apply to those offerings.¹⁰ CRS describes the September combined draft as giving the CFTC exclusive jurisdiction over cash or spot sales of digital commodities, including network tokens and ancillary assets outside the SEC's jurisdiction, with the SEC keeping some authority over primary-market sales of ancillary assets.¹²

Mature blockchains

House-passed text. A "mature blockchain system" is a blockchain system, together with its digital commodity, that is not controlled by any person or group of persons under common control. An issuer, a related person, a decentralised governance system, a registered exchange or another designated person may certify maturity to the SEC. The certification takes effect 60 days after filing unless the SEC rebuts it or stays it once for up to 120 days. The SEC may object within that period.⁹ Consumer Reports criticised this process as largely self-attested.¹⁸

Banking Committee substitute. The substitute does not use the "mature blockchain" label. Instead it defines "coordinated control" through SEC rulemaking, and a network token that depends on such control would be an ancillary asset.¹⁰¹²

Registration of exchanges, brokers and dealers

House-passed text. A trading facility that offers a spot market in at least one digital commodity would register with the CFTC as a "digital commodity exchange". Exemptions apply for facilities with only a de minimis amount of trading or that serve customers in a single state.⁹ The CFTC would have 180 days after enactment to adopt an expedited registration process for exchanges, brokers and dealers. Registrants would operate in provisional status until 270 days after the relevant final rules take effect.⁹ Brokers and dealers would register with the CFTC. The bill also requires the CFTC to write conflict-of-interest rules within 360 days.⁹

Combined September draft. CRS says exchanges, brokers and dealers would register with the CFTC, and would become Bank Secrecy Act financial institutions with anti-money laundering programmes. Exchanges would follow core principles, customer assets would generally belong to customers and not be commingled, and the bankruptcy provisions would be amended to cover holders of digital and ancillary assets.¹²

Decentralised finance and developers

House-passed text. Two parallel sections, one in the Securities Exchange Act and one in the Commodity Exchange Act, provide that a person is not subject to those Acts on the basis of listed activities in relation to a blockchain system or decentralised finance trading protocol. The activities include validating and relaying transactions, running a node or oracle, providing a read-only user interface, developing or distributing a blockchain system, participating in a liquidity pool for spot trades, and writing software that lets users hold their own keys. The SEC's and CFTC's antifraud and anti-manipulation authority remains.⁹ Another section provides that a non-controlling blockchain developer or service provider is not a money transmitter, and does not face a similar new registration requirement, solely for publishing software, supplying self-custody tools or maintaining infrastructure.⁹

Banking Committee substitute. The substitute includes similar protection for those who compile or validate transactions, run nodes or oracles, and develop distributed ledger software, and defines a "decentralized finance trading protocol" as one that runs on pre-set rules without reliance on a person for custody, with exclusions where a person or group can materially alter its operation or censor its use.¹⁰ A section titled the Blockchain Regulatory Certainty Act provides that a "non-controlling" developer or provider is not a money transmitting business and is not engaged in money transmitting under 18 U.S.C. 1960. It preserves that statute's application to a person who acts with specific intent to transfer funds known to derive from crime or to support unlawful activity.¹⁰ A further title calls for a rulemaking on applying existing securities intermediary and Bank Secrecy Act requirements to trading protocols that are not decentralised.¹⁰ The 10 September substitute extended CFTC registration and Bank Secrecy Act duties to non-decentralised protocols and limited the DeFi title to spot and cash digital commodity transactions.¹⁶

Stablecoin rewards

House-passed text. The House bill refers to the GENIUS Act's definitions for permitted payment stablecoins but, as read for this article, contains no counterpart to the Senate's section on interest and yield.⁹

Banking Committee substitute. Section 404 prohibits any "covered party", meaning a digital asset service provider and its affiliates, other than a registered stablecoin issuer, from paying interest or yield to a US customer or user in two cases: solely for holding payment stablecoins, or on a stablecoin balance in a way that is economically or functionally equivalent to interest on a bank deposit. Rewards tied to "bona fide activities or bona fide transactions" are permitted if they are not equivalent to deposit interest. The SEC, the CFTC and the Treasury Secretary must jointly issue rules within one year clarifying the line. They must include a non-exhaustive list of permitted rewards, such as rebates for payments, providing liquidity or posting collateral, and participating in governance or staking, which may be calculated by reference to a balance, duration or tenure. The section also bars evasion, protects a firm that relied in good faith on the rules from penalties if it cures a breach within 90 days, and bars marketing a stablecoin as a deposit or as government-backed.¹⁰ A sense-of-Congress clause states both that deposit-like payments may inhibit depository institutions and that activity-based rewards are critical to innovation.¹⁰

CRS notes that the GENIUS Act bars payment stablecoin issuers from paying interest but does not reach third parties such as exchanges, which banks call a loophole. The September combined draft would bar third-party yield equivalent to deposit interest, allow payments tied to bona fide transactions or activity, and let the Treasury Secretary block third-party yield within 18 months if it harms community bank deposits.¹² CoinDesk's 1 May report said the earlier text assigned rulemaking to Treasury and the CFTC; the reported Banking text names the SEC, CFTC and Treasury jointly.¹³¹⁰ The GENIUS Act restricts issuers and left the exchange question open.¹²

Ethics and other provisions

House-passed text. A rule of construction states that existing ethics laws continue to apply and that they bar members of Congress and senior executive branch officials from issuing a digital commodity while in public service.⁹ The House text also contains the Anti-CBDC Surveillance State Act, which would bar Federal Reserve banks from offering products directly to individuals or issuing a central bank digital currency.⁹

Combined September draft. CRS describes a provision that would bar the president, vice president, members of Congress, executive branch employees and their spouses from issuing or sponsoring digital assets for consideration. Exchanges could not list assets tied to an official who violates the ban. The Attorney General would enforce it, and state attorneys general could seek injunctive relief in some cases.¹²

CriticismReport an error

Bank trade groups on stablecoin yield

On 13 July 2026 the American Bankers Association, the Independent Community Bankers of America and 76 state associations wrote to Senate leaders asking for changes to section 404 before final passage. They argued that ambiguities could encourage stablecoin arrangements that function as substitutes for deposits, and objected to rewards tied to how much and how long customers hold stablecoins. They asked the Senate to replace the "functional and economic equivalent" standard with "substantially similar".¹⁹ The Consumer Federation of America's Corey Frayer warned in May that the rulemaking wording could let firms run activities and pass returns on to customers.¹³ Crypto firms said the compromise preserved rewards for real participation; Barnali Biswal of Hilbert Group said bank groups lobbied against the yield language until the vote.¹³²⁰

Ethics and the president's crypto interests

Democrats made an ethics provision a condition for their votes. Elizabeth Warren said in July that the draft "does nothing to stop President Trump" from earning more crypto income. Alsobrooks said the Department of Justice could not be relied on fully for enforcement. Sen. Bernie Moreno called the ethics language "the most powerful ethics language in US history", and commentators aligned with the White House argued that the Department of Justice, not state attorneys general, should enforce federal law.¹⁵ Earlier, Democrats had tried and failed to add conflict-of-interest limits in the House markup and the Senate Banking markup.⁸¹⁴

DeFi, developers and law enforcement

Rep. Sam Liccardo, described by Decrypt as supportive of crypto, questioned the House bill's DeFi exemption, saying projects might use the label to avoid regulation.⁸ In May 2026 the National Sheriffs Association wrote to the Senate Banking Committee that there is no good reason to give mixers, tumblers and DeFi a blanket exemption, and that while some software developers are not money transmitters, "plenty of others are", according to PYMNTS. The report said the White House planned to speak to law enforcement groups about their objections.²¹ Connor Howe of Enso told CoinDesk that the September draft dropped explicit protection under 18 U.S.C. 1960 for developers who never touch customer funds.²⁰

Consumer advocates

Consumer Reports said on the House vote that the bill "prioritizes regulatory certainty for the crypto industry at the expense of consumer protection". It objected that most digital assets would move to the CFTC, which it said lacks a consumer protection mandate, that state consumer laws would be preempted, that "decentralization" criteria could be exploited, and that mature status is largely self-certified.¹⁸

Industry reaction to the failed vote

Ripple's chief executive Brad Garlinghouse said the failure "stings" and blamed Democratic politics. Others expected the SEC and CFTC to act without legislation; CoinDesk reported that the SEC had put "Regulation Crypto Assets" out for comment in August and that CFTC Chair Selig had reportedly told staff to draft a market-structure regime under existing authority. Industry figures noted that agency rules can be reversed by a later administration while a statute cannot.²⁰

TimelineReport an error

See alsoReport an error

• GENIUS Act, the stablecoin law the bill's yield section builds on
• Stablecoin, the general article and list of stablecoins
• MiCA, the European Union's crypto-asset regulation

ReferencesReport an error