Over the last couple of weeks, buzz has been growing about the CLARITY Act, a proposed new framework for US crypto regulation. The bill’s first markup is scheduled for tomorrow morning.
But what is the significance of this new crypto bill, and which industry players support it?
New Act Brings CLARITY To Crypto Regulation
Since the GENIUS Act cleared a key cloture vote, US crypto policy has been an especially important topic. In late May, GOP Congressman French Hill proposed the Digital Asset Market Clarity (CLARITY) Act, a new framework for Web3 regulation.
The bill’s first markup will happen tomorrow morning at 10 AM EST.
The proposed act assigns the CFTC as the primary regulator for digital commodities (on‑chain tokens), including exchanges, brokers, and spot markets. It preserves the SEC’s authority over investment contract assets—securities under the Securities Act.
Overall, it creates precise definitions and compliance pathways to reduce inconsistent enforcement.
In addition to consumer protection measures, it attempts to provide thorough rules for defining tokens as securities or commodities, a thorny issue for regulators.
Without getting into excessive detail, the bill aims to remove ambiguity from several such situations.
Although it was proposed by a Republican, the CLARITY Act has strong bipartisan support, reflecting the desire to create a solid framework for crypto regulation.
However, the initial language focused specifically on assets, their classification, and firms that custody them. The proposed bill also exempts “DeFi activities” (like developers, transaction relayers) from conventional registration.
It also explicitly protects peer-to-peer transactions and individual self-custody of assets.
New and Upcoming Amendments
To correct some of the oversight, The Blockchain Regulatory Certainty Act (BRCA) was recently introduced as an amendment to the bill. Presently, the crypto industry’s political lobbying groups are attempting to help it along.
In addition to an initial show of support, eight leading trade associations have made further statements earlier today:
Crypto Groups Support the CLARITY Act. Source: Eleanor Terrett
Specifically, this amendment would ensure that the CLARITY Act doesn’t apply heavy-handed regulations where it isn’t appropriate.
However, some regulators may also disagree with this overall ethos. After all, what are laws like this for? Former CFTC Chair Tim Massad, who recently warned of crypto corruption, also testified about some potential pitfalls in the CLARITY Act:
“The CLARITY Act seems to start with the technology and ask, what do we need to do to make it easier for people to invest in this technology? But the strength of our securities and derivatives laws lies in the fact that we have traditionally focused on regulatory goals, and provided…the flexibility to achieve those goals,” Massad claimed.
Similar criticisms have been leveled at a wide range of recent crypto regulations, and the CLARITY Act will likely face more of the same.
It’s not yet clear how much this will impact the final bill, but the GENIUS Act underwent substantial amendments from its first version. Between tomorrow’s markup and the voting process, this bill could change dramatically in the next few weeks.