Which coins does the CLARITY Act affect?

The two-bucket system, in plain English

Every token the CLARITY Act touches lands in one of two buckets: a security, regulated by the SEC because early buyers are relying on a founding team's efforts to make the project succeed, or a digital commodity, regulated by the CFTC because its value comes from the use of a blockchain network that no single person or small group controls. Section 301 is where digital commodities and "permitted payment stablecoins" get carved out of the legal definition of a security in the first place. Section 202's "mature blockchain system" test is what decides which bucket a given token falls into. Neither test names a single coin — they're applied case by case, which is exactly why some assets (Bitcoin) are easy calls and others (a six-month-old token from a five-person team) are not.

For the full legal mechanics of that split, see our section-by-section breakdown; for the underlying vocabulary, the glossary entry on "mature blockchain system" and "digital commodity" are worth a read first.

Bitcoin

Bitcoin is the least controversial case in the entire bill. It has no founding company, no pre-mine sold to insiders, and no single entity that controls upgrades — value comes from a global, disparate network of miners and node operators, not from anyone's promised managerial effort. That's the textbook profile of a "mature blockchain system," and virtually every legal analysis of the bill treats Bitcoin as a digital commodity from day one.

Separately from CLARITY Act passage, the SEC and CFTC jointly issued interpretive guidance in March 2026 formally classifying Bitcoin as a digital commodity alongside roughly a dozen and a half other tokens. That's a real, current development — but it's agency guidance, not a statute, so it can be narrowed or reversed by a future SEC or CFTC leadership. Writing that classification into law, so it can't simply be undone by the next administration, is a core reason the CLARITY Act exists. Practically, the change Bitcoin holders would notice isn't about Bitcoin itself — it's that the exchange or broker you trade it through would need to register with the CFTC under new rules covering custody, capital, and conflicts of interest.

Ethereum

Ethereum's case is nearly as strong as Bitcoin's today, though its history is more layered. Ether's 2014 sale looked more security-like at the time, and the SEC spent years signaling mixed views on its status. Since Ethereum's 2022 move to proof-of-stake, the network has been run by a broad, geographically distributed set of validators rather than a single company, which is the kind of fact pattern the "mature blockchain system" test is built around. Ether was also named alongside Bitcoin in the March 2026 SEC/CFTC joint interpretive release as a digital commodity.

The CLARITY Act doesn't carve out a special rule for Ethereum by name — it would reach the same result Bitcoin does, by applying the general decentralization test to Ethereum's facts. That matters for anyone building on Ethereum, too: smart-contract developers, validators, and wallet builders benefit from the same software-development exemptions described in the DeFi section below, regardless of ETH's own token status.

Altcoins and new token launches

Most new tokens don't start where Bitcoin and Ethereum are today. A typical launch — a team raises funds, controls the initial token supply, and drives early development — looks like the "founder effort" pattern the SEC has used to bring enforcement actions under the Howey test for over a decade. Under the CLARITY Act, that token would generally launch as a security, sold under SEC-registered or exempt offering rules, with disclosure obligations about token economics, supply concentration, and the team's control over the protocol.

The bill then gives that token a path out: as the network decentralizes — token holdings spread across more independent parties, control over upgrades shifts to a broader community, the founding team's influence recedes — the issuer can seek certification that the network meets the "mature blockchain system" standard. Once certified, the token can shift from SEC-regulated security to CFTC-regulated digital commodity, and the heavier securities-disclosure obligations fall away. Think of it less as a single event and more as an on-ramp: strict rules early, when centralization risk is highest, loosening as the network genuinely decentralizes.

Well-known altcoins illustrate why this is a facts-and-circumstances test rather than a simple age cutoff. Coins like XRP, Solana, Cardano, Avalanche, and Dogecoin were also named in the March 2026 agency guidance as digital commodities — but XRP in particular is regularly flagged in legal commentary because a large share of its supply sits in escrow controlled by Ripple, which is exactly the kind of concentration fact the maturity test is designed to weigh. Two tokens that look similar on the surface can land in different buckets depending on details like this.

Stablecoins: a different law entirely

This is the single most common point of confusion, so it's worth being direct about it: stablecoins are mostly not regulated by the CLARITY Act. Payment stablecoins are governed by the GENIUS Act, a separate law signed in July 2025 that sets 1:1 reserve-backing requirements, monthly reserve attestations, and rules on who's eligible to issue one (bank subsidiaries, qualified nonbank issuers, and state-qualified issuers).

The CLARITY Act's role is narrower — Section 301 excludes "permitted payment stablecoins" from the legal definitions of both "security" and, separately, treats them outside the digital-commodity spot-market regime, so they aren't pulled into the SEC/CFTC jurisdictional fight the rest of the bill sets up. The SEC keeps a supervisory role over permitted payment stablecoins specifically when they trade on SEC-registered platforms, while neither agency can regulate a stablecoin issuer's day-to-day operations directly — that's GENIUS Act territory. A simple way to keep the two straight: GENIUS regulates the stablecoin itself; CLARITY regulates where stablecoins fit into the broader market-structure map. One live sticking point in current Senate negotiations is language (referenced around Sec. 604) restricting stablecoin "rewards" that function like bank-deposit interest — see our Timeline & Updates page for where that stands.

DeFi protocols and governance tokens

Decentralized finance gets one of the bill's most deliberate — and most contested — carve-outs. Pure software activity is exempted from broker, dealer, and exchange registration requirements: running a validator node, publishing or updating open-source protocol code, building a non-custodial wallet, or providing a front-end interface to a decentralized protocol. The logic is that someone who never takes custody of user funds and doesn't control a centralized order book isn't playing the same role as a registered exchange, even if their code enables trading.

That exemption is about the activity, not a blanket exemption for every governance token tied to a DeFi protocol — a governance token still gets evaluated under the same security-vs-digital-commodity tests as any other token, based on how concentrated control over it is. And the carve-out doesn't touch anti-fraud liability, which applies to DeFi developers and protocols the same as anywhere else in the bill. Exactly how far the DeFi exemption reaches has been one of the harder Senate negotiating points, with Senate Banking and Senate Agriculture committee drafts taking different approaches at various points — another reason to treat any single page (including this one) as a snapshot rather than the final word.

NFTs and digital collectibles

NFTs are generally kept outside the "digital commodity" definition entirely, and outside securities treatment too, as long as they aren't structured as an investment vehicle (for example, an NFT sold with promises of profit-sharing or managed returns would still look like a security under ordinary Howey-test analysis, CLARITY Act or not). Rather than building a full regulatory regime for NFTs, the House bill directs a GAO study on digital collectibles — a signal that Congress sees this as an area to study further, not one that needs an immediate new rulebook.

Exchanges, brokers, and custodians — the part every coin holder feels

Regardless of which bucket a specific coin lands in, the CLARITY Act's biggest everyday impact for most holders is on the platforms they use, not the coins themselves. The bill creates new registration categories — digital commodity exchanges, brokers, and dealers — with capital requirements, mandatory customer-fund segregation, trade-surveillance obligations, and a "qualified custodian" standard for where customer assets can be held. A firm that handles both securities-classified tokens and digital commodities can register with both the SEC and CFTC rather than being forced to pick a single regulator. In short: whichever coins you hold, the exchange or broker in the middle of that trade is where most of the new compliance weight lands.

Quick reference: coin categories and likely treatment

This table is a plain-English summary of general patterns described in committee materials and legal analysis, not a legal classification of any specific asset. Real classification depends on facts the SEC, CFTC, or a court would have to evaluate — see the glossary and FAQ for the underlying tests, and try the quiz below to see how the reasoning applies to a token you're curious about.

See how the test applies to a specific token

The factors above — decentralization, control over upgrades, how a token was originally sold — are exactly what our free Token Classification Quiz walks through, coin-agnostic and in about two minutes. It's educational, not a legal opinion, but it's a genuinely useful way to see where a project you're tracking might land. For the exact statutory language behind these tests, see the section-by-section breakdown, or browse the glossary for definitions of terms like "digital commodity," "mature blockchain system," and "permitted payment stablecoin."