Clarity Act: How the U.S. is Trying to Regulate the Cryptocurrency Market

The CLARITY Act is set to become the first comprehensive federal framework for cryptocurrencies and digital assets in the U.S.: the bill distributes powers among regulators, introduces token classification, and sets rules for exchanges, brokers, custodians, and issuers.

• The CLARITY Act aims to create a unified federal system for the oversight of cryptocurrencies and digital assets for the first time.
• The bill categorizes digital assets into three groups, delineates the responsibilities of the SEC and CFTC, and establishes common rules for market participants.
• If a compromise is not reached by August 8, the likelihood of the CLARITY Act being passed in 2026 will significantly decrease.

The Digital Asset Market Clarity Act of 2025, or simply the CLARITY Act, is a bill in the U.S. Congress designed to close a long-standing gap in the regulation of the crypto industry. Before its introduction, the market operated in a mode that participants themselves referred to as "regulation by litigation": the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission had been arguing for years over which agency had jurisdiction over digital assets.

In the English-speaking legal community, these regulators are known as the United States Securities and Exchange Commission and the United States Commodity Futures Trading Commission. The CLARITY Act seeks to draw a clear line of jurisdiction between them: where oversight of securities begins and where oversight of commodities and crypto assets traded on the spot market starts.

Why the CLARITY Act is Needed

Under former SEC Chairman Gary Gensler, the approach was strict: almost any token was treated as a Security, meaning it had to comply with relevant laws. The CFTC, on the other hand, viewed decentralized crypto assets more as Commodities and sought to expand its authority over spot markets.

Such a conflict created a gray area. For institutional investors, this meant increased risks; for projects, uncertainty; and for innovation, an incentive to move beyond the United States. Ultimately, the market faced opaque rules and a constant threat of litigation.

The CLARITY Act aims to replace this model with a clear system. Its logic is that regulation is built not around one-off claims against individual companies but around pre-defined rules. For the market, this is a matter of transparency; for regulators, it is a question of jurisdictional boundaries; and for businesses, it is the ability to understand what requirements need to be met.

Three Categories of Digital Assets

The main idea of the bill is to divide digital assets into three groups. Thus, the same token should not depend each time on how it is interpreted by a specific agency.

• Category: digital goods. Description: assets related to blockchain and used for payments, voting, access to services, or incentivizing network participants. Regulator: CFTC oversees spot markets, including combating fraud and manipulation. Examples: Bitcoin and Ethereum are likely included in this group.
• Category: investment contract assets. Description: tokens sold to raise capital, such as in an ICO. Regulator: at the initial offering, this falls under the SEC's jurisdiction, and when sold on the secondary market by a non-affiliated party, the token may transition to the digital goods category and come under CFTC oversight. Examples: tokens through which a project initially raises funds and then goes to free trading.
• Category: permitted payment stablecoins. Description: tokens pegged to national currency with provisions for buyback at a fixed rate. Regulator: issuers are subject to banking regulators, while the SEC and CFTC maintain authority against fraud on platforms where such assets are traded. Examples: payment stablecoins that meet reserve and buyback requirements.

Here, the CLARITY Act complements the GENIUS Act, passed in July 2025. This law has already established basic requirements for stablecoins: one-to-one reserving, a ban on algorithmic stablecoins, and monthly disclosure of reserve data.

What the CLARITY Act May Change for XRP

For XRP, the key question is not a separate provision for one token, but rather which category it will fall into under the new system. If XRP is considered a digital good on the secondary market, its spot trading will fall under CFTC jurisdiction, and exchanges and brokers will have to comply with registration, customer identification, anti-money laundering requirements, and the separate custody of client assets.

For platforms, this may simplify the decision to list XRP: instead of a dispute over which regulator is primary, a clear scheme for admission and oversight will emerge. However, if the sale of XRP is used to raise capital by the issuer or an affiliated party, such a transaction may remain under SEC jurisdiction as an investment contract.

For XRP holders, the adoption of the CLARITY Act would mean more clarity in trading and holding the asset. For issuers and affiliated sellers, it would necessitate understanding in advance which rules apply during initial offerings, secondary sales, and dealings with trading platforms.

What Rules Will Appear for Exchanges, Brokers, and DeFi

The CLARITY Act is not limited to classification. It introduces practical requirements for market participants: crypto exchanges and brokers must register with the CFTC, conduct customer identification, combat money laundering, monitor suspicious transactions, and keep client assets separate from their own funds.

A separate section addresses Decentralized Finance. Code developers and providers of non-custodial wallets are exempt from direct regulation. However, if a platform effectively controls users' funds, it must comply with the rules as a full participant in the financial market.

For the industry, this is a particularly sensitive issue. On one hand, developers need a Safe Harbor law to avoid prosecution solely for creating software. On the other hand, authorities fear that overly broad protection could allow such tools to be used for ransom cyberattacks and money laundering.

How the Bill Passed the House and Stalled in the Senate

The House of Representatives passed the CLARITY Act on July 17, 2025, with 294 votes in favor and 134 against. The bill was supported by all Republicans and 78 Democrats. This level of bipartisan agreement is rare for cryptocurrency legislation. However, the vote in the House does not yet make the CLARITY Act law: final approval from the Senate, reconciliation of the final text, and the president's signature are still required.

In the Senate, the process has been slower. In January 2026, the agricultural committee approved its version, followed by the United States Senate Committee on Banking, Housing, and Urban Affairs in May 2026. Work then began to reconcile the two Senate texts with the version passed by the House.

After this, the combined version was introduced into the Senate legislative calendar. At this stage, the main political bargaining around the final text began: the bill has not been rejected, but it is stuck in the Senate and has not yet completed the path to enactment.

Main Intrigue: Will There Be Enough Votes

To pass the Senate, 60 votes are needed. This is the threshold required to overcome a filibuster—a parliamentary tactic that allows a minority to delay legislation. The Republicans hold 53 seats, so they need the support of at least seven Democrats.

By the third decade of July, no Democrat had publicly stated that they were ready to support the final version. The main dispute has not revolved around the cryptocurrency mechanics itself, but around the ethical amendment.

The future of the CLARITY Act depends not on a single amendment, but on whether Republicans and Democrats can agree on ethics, DeFi, and stablecoins before the Senate calendar shifts priorities.

Democrats are demanding that the legislation include strict provisions prohibiting the president, vice president, members of Congress, and their families from having personal financial interests in the crypto business. The context is clear: according to a financial disclosure published on July 1, 2026, Donald Trump's crypto earnings for 2025 amounted to about $1.4 billion, primarily from World Liberty Financial and his meme coin.

On July 20, Donald Trump agreed to include the ethical clause in the text. But the key question is how strict it will be. If the wording turns out to be soft and leaves loopholes for the president's family and business, the Democrats are unlikely to agree to support the document.

Section 604 and the Safe Harbor Dispute

Another unresolved issue is Section 604, known as the Blockchain Regulatory Certainty Act. It is intended to protect open-source developers, node operators, and creators of non-custodial wallets from law enforcement prosecution, even if someone uses their software for money laundering.

The FBI and the Department of Justice are strongly opposed. Their position is simple: such a provision would create a "Safe Harbor" for architects of tools that could be used in ransom attacks and schemes to legalize criminal proceeds. Negotiations between the parties have yet to yield a compromise.

For the crypto industry, this is a fundamental point. Developers want the law not to equate writing code with control over others' funds. Law enforcement, on the other hand, fears losing leverage over those who create infrastructure for shadow operations.

Stablecoins and Competition with Banks

The third contentious issue concerns yields on stablecoins. The banking version of the bill prohibits crypto platforms from paying interest on stablecoin deposits. If a platform pays income for "holding" such assets, it effectively becomes a bank and must comply with banking requirements.

Exceptions are allowed for transaction rewards, payments, and loyalty programs. The crypto market disagrees: the industry believes that such a provision protects not consumers, but traditional banks from competition.

The scale of the issue is enormous. On the Market (economics), stablecoins with a total volume exceeding $300 billion are already in circulation, and the rules for yield accrual affect a wide range of users, platforms, and investors.

Why the August 8 Deadline is So Important

The deadline is August 8, 2026, the last working day of the Senate before the recess. After returning in September, lawmakers' attention will be occupied with the budget process and the election campaign.

If an agreement on key amendments does not emerge before the break, the chances of passing the CLARITY Act in 2026 will drop sharply. However, this does not mean a definitive rejection: the bill can return to active consideration if a bipartisan compromise is reached and a slot opens in the Senate calendar.

Future chances will be influenced by the same bottlenecks: the rigidity of the ethical clause, the dispute over Section 604, yield rules for stablecoins, the budget agenda, and the election campaign. For the crypto market, a delay means continued uncertainty: without a unified regulatory framework, investors, platforms, and issuers will continue to operate under vague rules.

The future fate of the bill depends on three compromises:

• Ethical clause.
• Status of developers.
• Yield rules for stablecoins.

If agreements can be reached on these points, the U.S. could have its first comprehensive federal law on digital assets. If not, the crypto industry will remain in its familiar zone of legal uncertainty for at least another year.