The CLARITY Act: A Turning Point for Crypto Regulation?

Web3 & Blockchain

The CLARITY Act has cleared another major hurdle in the Senate, but its passage is far from guaranteed.

TL;DR
• The CLARITY Act aims to end the SEC and CFTC crypto jurisdiction battle.
• The bill must clear the full Senate and House-Senate reconciliation before Congress enters recess.
• If passed, the CLARITY Act could become the first major U.S. law to formally define crypto market structure.

Summary
The U.S. Senate Banking Committee approved the CLARITY Act with a 15‑9 vote on May 14, advancing a bill that seeks to resolve the long‑standing jurisdiction dispute between the SEC and CFTC over digital assets. The legislation assigns the CFTC to oversee most digital commodities while the SEC retains authority over crypto assets classified as securities, aiming to eliminate regulatory uncertainty that has hindered institutional participation.

Key actionable insights:
• Ensure compliance frameworks align with the new split of SEC and CFTC oversight to avoid legal gaps.
• Prepare for enhanced AML and KYC requirements that the Act will enforce across stablecoins and DeFi platforms.
• Monitor the political timeline: House recess begins July 27 and Senate recess starts August 10; missing these windows could push the bill into a difficult fall calendar.

The bill’s passage hinges on securing at least 60 Senate votes, requiring bipartisan support amid concerns over stablecoin reward structures, DeFi developer liability, and ethics provisions related to public officials’ crypto involvement. Failure to meet the pre‑recess deadlines could delay comprehensive market structure reform until 2030, affecting major assets such as Bitcoin, Ethereum, XRP, and Cardano.

For investors, the CLARITY Act represents a potential catalyst for clearer regulatory guidance, reducing uncertainty and opening the market to larger institutional players. However, the Act’s success depends on timely reconciliation between the House and Senate and on addressing unresolved policy issues, including the division of power and ethical safeguards. Stakeholders should stay alert to legislative developments and adjust risk management strategies accordingly.

Will the CLARITY Act pass before the summer recess, or will it face further delays?