Congress Introduces CLARITY Act to Establish Digital Asset Regulatory Framework
U.S. House lawmakers introduced the bipartisan CLARITY Act of 2025 proposing a comprehensive regulatory framework for digital assets that would delineate agencies' oversight roles, establish a provisional registration regime for crypto intermediaries, create provisions for decentralized finance, and more.
On May 29, 2025, the U.S. House Committees on Financial Services and Agriculture introduced the newly named Digital Asset Market Clarity (CLARITY) Act of 2025 ("Bill"), an updated version of the market structure framework previewed in a discussion draft from earlier in May. The Bill builds on the previously introduced FIT21 bill and maintains the discussion draft's approach of dividing oversight of digital assets between the Securities and Exchange Commission ("SEC") and the Commodity Futures Trading Commission ("CFTC"), but also incorporates key changes to regulatory scope, definitions, and implementation mechanics.
Key Takeaways
Provisional Registration. The Bill establishes a provisional registration regime for digital commodity exchanges, brokers, and dealers, replacing the draft's "notice of intent" model. Provisionally registered firms must comply with disclosure, recordkeeping, and membership requirements until full CFTC registration is implemented.
Updated Definitions. The Bill pivots away from generic affiliate/relationship terminology and instead uses definitions tailored to the digital-commodity context (such as "digital commodity affiliated person" and "digital commodity related person").
Restrictions on Insiders. Treatment of insiders is further defined: Graduated restrictions on token sales now apply to affiliated and related persons, with rules tapering off after a blockchain system is deemed mature.
Decentralized Finance ("DeFi"). DeFi safe harbor provisions are expanded. The Bill exempts non-custodial protocol participants—such as developers and validators—from registration.
Investment Contract Assets. The Bill affirms that digital assets sold via investment contracts are not securities, codifying this distinction more explicitly than the discussion draft. It also preempts conflicting state securities laws for qualifying digital commodities.
Custody. In a move consistent with the SEC's SAB 122 (and the recission of SAB 121), the Bill clarifies that regulators may not require financial institutions to include customers' assets as liabilities in most circumstances.
Intergovernmental Collaboration. The Bill directs the SEC and CFTC to collaborate with foreign regulators and allow cross-border information sharing.
