Frequently Asked Questions About the CLARITY Act

The Digital Asset Market CLARITY Act (H.R. 3633) is pending U.S. legislation that would create the first comprehensive federal market-structure framework for digital assets, splitting regulatory jurisdiction between the SEC and the CFTC. Introduced in May 2025, it passed the House 294-134 in July 2025 and remains pending in the Senate as of July 20, 2026.

CLARITY is the short title Congress gave the bill, formally the "Digital Asset Market Clarity Act of 2025." Official bill materials don't spell out a letter-by-letter acronym breakdown, so rather than guess, treat CLARITY as the bill's name and check the official text on congress.gov if you need the exact statutory title.

Partially. The House of Representatives passed the CLARITY Act 294-134 in July 2025. It has not passed the Senate or been signed into law. It cleared the Senate Banking Committee 15-9 in 2026 and has sat on the Senate calendar since June 1, 2026, with no confirmed floor vote date as of July 20, 2026.

No. As of July 20, 2026, the CLARITY Act is still pending legislation, not law. It needs 60 votes to pass the full Senate, then a presidential signature, before any of its provisions take effect. Check congress.gov and our Timeline & Updates page for the current status.

Bitcoin and Ethereum are already legal to own, trade, and use in the United States; no current or proposed law bans them. The CLARITY Act would instead clarify how such assets are regulated by excluding qualifying "digital commodities" from the definition of a security and giving the CFTC oversight of digital commodity spot markets.

Both, under a split jurisdiction. The SEC would regulate investment contracts involving digital commodities, oversee permitted payment stablecoins on SEC-registered platforms, and retain general anti-fraud authority. The CFTC would get exclusive jurisdiction over digital commodity spot markets through registered exchanges, brokers, and dealers (Section 401), with matching anti-fraud authority in that market.

The bill's core mechanic is excluding "digital commodities" and "permitted payment stablecoins" from the legal definition of a "security" under Section 301, shifting primary oversight of their spot markets to the CFTC. Whether a given asset qualifies often depends on the bill's "mature blockchain system" decentralization test in Section 202. For the precise statutory language, read the bill text on congress.gov, or see our Section-by-Section Summary.

"Mature blockchain system" is the CLARITY Act's decentralization test, which determines when reduced disclosure requirements apply under Section 202. Broadly, a blockchain system is more likely to be treated as decentralized or mature the less control any single person or group has over it. Primary-market issuers must keep filing disclosures until their system is certified mature.

Generally, the bill exempts validators, software developers, wallet developers, and blockchain-system creators from SEC/CFTC registration for those specific activities (Sections 309, 409), though anti-fraud liability still applies to everyone. DeFi treatment remains unresolved, though: Senate Banking and Senate Agriculture committees have produced different draft text on whether software developers or front-end operators must register.

"Permitted payment stablecoins" would be excluded from the legal definition of a security under Section 301. The SEC would oversee permitted payment stablecoins on SEC-registered platforms, but neither the SEC nor the CFTC could regulate a stablecoin issuer's operations directly. Interest-bearing stablecoin provisions, referenced around Section 604, are a current sticking point because banks oppose them competing with deposits.

Because the bill isn't law yet, it's premature to take binding compliance action. Generally, once enacted, registered exchanges, brokers, and dealers would need to meet capital requirements, segregate customer funds with qualified digital-asset custodians, run AML programs, and comply with the Bank Secrecy Act (Secs. 110, 404, 406), following an expedited registration process the SEC and CFTC must stand up within 180 days. This isn't compliance advice; consult a securities or commodities attorney.

That's a technical legal determination this site can't make for you. Under the CLARITY Act framework, a token is more likely to be treated as a digital commodity once its underlying blockchain qualifies as a "mature blockchain system" under the Section 202 decentralization test; otherwise, traditional investment-contract (Howey Test) analysis continues to apply. Our Token Classification Tool offers an educational walkthrough, but it is not legal advice.

The bill includes several investor-facing provisions: mandatory disclosures until a blockchain is certified mature (Sec. 202), required "clear and accessible educational materials" on technology and fraud red flags (Sec. 314), custody and insolvency disclosure rules (Sec. 311), and capital and customer-fund-segregation requirements for registered firms. Whether these prove effective in practice can't be predicted, and this isn't a guarantee of protection.

FIT21 (the Financial Innovation and Technology for the 21st Century Act) was an earlier House-passed crypto market-structure bill from a prior Congress that pursued similar SEC/CFTC jurisdiction-splitting goals. The CLARITY Act (H.R. 3633) is the current Congress's revised successor effort. We don't have verified section-by-section comparison data between the two bills, so for precise textual differences, consult the official summaries on congress.gov or the House Financial Services Committee site.

If enacted, the bill lays out an effective-date ladder under Section 112: 80 days for the CFTC's digital commodity trading certification review to open (Sec. 403); 180 days for SEC blockchain recordkeeping rulemaking (Sec. 305); 270 days for Title IV CFTC market provisions to take effect; and 360 days for all implementing rules to be finalized and Titles II-III SEC provisions to take effect. Track any change to this schedule on our Timeline & Updates page.

Three disputes are stalling a floor vote as of July 2026: presidential ethics language addressing the Trump family's crypto business interests, which Democrats want and Republicans call a poison pill; differing Senate Banking and Senate Agriculture draft text on DeFi developer registration; and bank opposition to interest-bearing stablecoin provisions (around Sec. 604) on illicit-finance grounds. A consolidated committee draft was expected around July 17-20, 2026.

Read the official, current text of H.R. 3633 directly on congress.gov at its bill page, alongside the House Financial Services Committee's section-by-section summary and the Senate Banking Committee's summary. Our own Section-by-Section Summary translates the bill into plain English, but always defer to the official text for anything you rely on.