The CLARITY Act: the bill set to redraw crypto…

A ten-year battle nearing its end

On 14 May 2026, at 10:30 in the Senate’s Dirksen room, the Banking Committee adopts by 15 votes to 9 the Digital Asset Market Clarity Act. Two Democrats, Ruben Gallego (Arizona) and Angela Alsobrooks (Maryland), cross the aisle to join the thirteen Republicans. For the first time since the origin of the crypto debate in Congress, a complete market-structure text clears the critical stage of a Senate committee with a documented bipartisan vote (source: TheStreet Crypto, 14 May 2026).

The scope of the event exceeds mere parliamentary procedure. The CLARITY Act is the first federal text that structurally resolves the turf war that has poisoned the industry for ten years: the SEC, historically led by Gary Gensler, considered nearly all tokens as securities (relying on the 1946 Howey precedent), while the CFTC claimed jurisdiction over the main assets like Bitcoin and Ethereum, which it qualifies as commodities. This ambiguity had pushed tens of billions of dollars of capital and talent out of the US market, a flight documented by Coinbase, Andreessen Horowitz, and multiple crypto think tanks. The CLARITY Act settles it.

Genesis and legislative timeline

The original text was introduced by French Hill, chair of the House Financial Services Committee, on 29 May 2025. It was adopted by the House of Representatives on 22 July 2025 by 294 votes to 134, the largest bipartisan vote ever recorded on a crypto text in Congress (source: Latham & Watkins, US Crypto Policy Tracker).

The text then stayed stuck in the Senate for ten months, while the Senate Banking Committee worked its own version (under the name Responsible Financial Innovation Act of 2025), with successive discussion drafts published in July 2025 (Tim Scott and Cynthia Lummis), September 2025 (182 pages), then January 2026 (278 pages). On 11 May 2026 at midnight, the final 309-page version is made public before the 14 May markup (CoinDesk, 12 May 2026).

On 14 May, after six hours of contentious hearing marked by the frontal attacks of Elizabeth Warren, the bill clears the markup and is now on its way to the Senate floor. To become law, it will still need to:

Reconcile the Banking version with that of the Senate Agriculture Committee (which covers CFTC jurisdiction)
Reach the 60 votes on the Senate floor, which will require at least seven additional Democrats
Reconcile the final text with the House version
Receive President Trump’s signature

The realistic timeline aims for enactment before the end of 2026, ideally before the November midterms.

The core of the mechanism: the SEC / CFTC split

The bill institutes a fundamental legal dichotomy between two categories of digital assets, each falling under a distinct regulator.

Securities under the SEC

Tokens sold within an investment contract (in the sense of the Howey precedent) remain by default subject to SEC jurisdiction. This is the “default” status of new tokens at their primary launch.

Digital commodities under the CFTC

A new category of “digital commodities” is created and placed under the exclusive jurisdiction of the CFTC, including on spot markets, a major change, since the CFTC historically had jurisdiction only over derivatives. According to Gibson Dunn (November 2025 analysis), for an asset to qualify as a digital commodity, it must cumulatively:

Be intrinsically linked to and derive its value from a “mature blockchain system”
Be sufficiently decentralised
Not confer property rights (debt, equity, liquidation rights, interest, dividends)

The key concept: the “mature blockchain”

This is probably the most important conceptual innovation of the bill. According to Tangem’s analysis (February 2026) relaying the legislative text, a mature blockchain is defined as “a blockchain system, with its associated digital commodity, that is not controlled by any person or group of persons under common control”.

For a network to qualify as mature, it must satisfy specific criteria:

Full operational functionality
Effective decentralisation: no entity controls more than 20% of the supply or voting power
Absence of unilateral update authority by the founders or the initiating company

This qualification creates a migration path: a token can start as a security (primary launch) and “graduate” to digital commodity when the network becomes sufficiently decentralised. This is what Davis Wright Tremaine calls, in its January 2026 analysis, the “tokenized continuum”.

The “ancillary asset” concept

A third, hybrid category was introduced: the “ancillary asset”, defined as “a network token whose value depends on the entrepreneurial or managerial efforts of an ancillary originator or a related person” (bill text, 11 May 2026 version).

The bill creates a rebuttable presumption that a network token is an ancillary asset, unless the originator submits to the SEC a written certification with reasonable evidence demonstrating the contrary. The SEC has 60 days to reject the certification on the basis of factual elements.

When an asset is certified as non-ancillary, it escapes SEC jurisdiction and moves under the CFTC.

Regulation Crypto: the new registration exemption

The bill creates a registration exemption to the Securities Act named “Regulation Crypto” (Section 103 of the text). According to the section-by-section summary published by the Senate Banking Committee:

An issuer may raise the greater of: (1) $50 million per calendar year for four years, or (2) 10% of the total dollar value of ancillary assets in circulation
The absolute cumulative cap is $200 million in gross proceeds
Secondary transactions on these tokens become free once certification is done

This is a major regulatory innovation. Today, launching a token in the United States requires either a Regulation D exemption (reserved for accredited investors, so retail excluded), or a full S-1 registration (extremely costly and legally risky). Regulation Crypto creates a viable middle path.

A second exemption, “Regulation DA” (Digital Assets), frames the semiannual disclosure obligations for blockchains in the process of maturing. Issuers must report to the SEC the state of the blockchain, the efforts of the issuer and related persons, as well as the financial information tied to the blockchain (Patomak Global Partners, August 2025 analysis).

The stablecoin compromise: the subject that blocked everything

For months, the main sticking point was not classic tokens, but stablecoins and their yield. The debate pits:

Traditional banks (the American Bankers Association leading), who fear that a yield-bearing stablecoin becomes a direct competitor to interest-bearing deposit accounts
The crypto industry (Coinbase, Circle, Tether), which defended the freedom to remunerate stablecoin holders

The final compromise in the 11 May 2026 version prohibits rewards on the mere passive holding of stablecoins when these rewards are “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit” (CoinDesk). But the bill allows stablecoin rewards or incentives tied to an activity, that is, loyalty programmes, cashback, or yields tied to the active use of the stablecoin in DeFi protocols.

This dividing line, negotiated by the skin of its teeth, partly satisfies both camps. It is what unblocked the markup.

The DeFi victory: developer protection

This is one of the most important advances for the ecosystem. The bill integrates the Blockchain Regulatory Certainty Act (BRCA), which establishes that:

Non-custodial developers (those who do not control users’ funds) are not considered money transmitters
Fully decentralised DeFi protocols can operate without a FinCEN licence
Smart-contract developers do not bear responsibility for users’ actions

This is a fundamental legal protection that responds directly to cases like Tornado Cash (prosecutions against developers) or Samourai Wallet (arrests). The DeFi Education Fund welcomed this integration: “we are encouraged by the direction of recent negotiations and note that the most important provisions for developers and infrastructure providers, the BRCA and the protections under the Exchange Act, are in this bill” (CoinDesk, 12 May 2026).

The text also covers important technical elements:

Legal recognition of DAOs: a DAO is not treated as a “single person” for the purposes of the Securities Law’s control provisions
Bankruptcy safe harbor: digital-commodity transactions benefit from protections similar to those of conventional derivatives in a custodian’s bankruptcy
Portfolio margining: the SEC and CFTC are required to jointly issue rules allowing portfolio margining across securities, swaps, futures and digital-commodity accounts
NFTs: generally excluded from the Securities Laws’ perimeter
Tokenized securities: remain securities for all purposes

The flashpoints: what was not settled

The Trump ethics question

This is the most politically charged point. According to Elizabeth Warren’s official statement at the markup, President Trump and his family reportedly accumulated at least $1.4 billion of gains on crypto deals since he took office (Senate Banking Committee, 14 May 2026). World Liberty Financial (the Trump family’s crypto company) and the TRUMP memecoin are at the heart of the controversy.

Warren and Democratic senator Jack Reed wrote to the Department of Justice and the Treasury to request an investigation into World Liberty Financial. They cite a Wall Street Journal article on a partnership with a firm named AB, which had previously tried to develop a resort in East Timor under the direction of two individuals sanctioned by the Treasury for “pig butchering scams”. World Liberty denied any direct association with these sanctioned individuals (CoinDesk markup liveblog).

Several Democratic amendments to create ethics guardrails applicable to the president, vice-president, lawmakers and senior officials were rejected. Patrick Witt, White House crypto adviser, publicly declared that the negotiating position was to establish rules applying “to everyone, from the president to the Capitol Hill intern”, but to reject any provision specifically targeting an officeholder.

The ethics question partly falls under other Senate committees (notably Ethics), which complicates resolution. Senator Mark Warner explicitly conditioned his final vote on the inclusion of these guardrails.

The rejection of the Warren amendments

The 14 May markup was the occasion for dozens of Democratic amendment votes, almost all rejected:

Restoration of sanctions authority over DeFi platforms (reference to the Tornado Cash case): rejected 11-13
Prohibition on investing certain digital assets in retirement accounts: rejected 11-13
Publication of bank-supervision information tied to Jeffrey Epstein: rejected 11-13
Restriction of the Federal Reserve on master accounts for uninsured deposit institutions engaged in digital assets

These serial rejections set the tone of the text’s political orientation: favourable to the industry, restrictive on regulatory expansion.

The mapping of positions

The supporters

The Trump administration and the White House (Patrick Witt, David Sacks former crypto czar)
Senate Banking Republicans (Scott, Lummis, Boozman)
The major crypto industry: Coinbase (CEO Brian Armstrong called the bill a “real compromise” that “could redraw how Americans interact with money and financial markets”), Circle, Ripple, Andreessen Horowitz
DeFi Education Fund and The Digital Chamber

The opposition and critics

Senator Elizabeth Warren (D-MA, ranking member Banking): “this bill puts investors, our national security and our entire financial system at risk, and it will turbocharge Donald Trump’s crypto corruption”
NASAA (North American Securities Administrators Association, which groups the regulators of the 50 US states): documented opposition in January 2026 and an official statement after the vote (14 May 2026) deploring “the advancement of a bill with provisions that bad actors will seek to exploit”
Unions: AFL-CIO, SEIU, AFT, NEA, AFSCME, who fear the exposure of retirement accounts and pension funds to crypto volatility
American Bankers Association: pressure to harden stablecoin restrictions (partly satisfied)

The Democrats open to negotiation

Three names to watch to reach 60 votes: Ruben Gallego, Angela Alsobrooks (who voted for it in committee), and Mark Warner. On the side of progressive senators like Bernie Sanders or Ed Markey, the opposition stays strong.

Expected consequences for the crypto ecosystem

For centralised exchanges

This is probably the sector that gains the most from enactment. Coinbase would see a major share of its listings slide under the CFTC (digital-commodity status), considerably less costly to serve than the SEC. Brian Armstrong has quantified the stake several times: the end of multi-year proceedings with the SEC frees several hundred million dollars in legal costs and regulatory fees.

Exchanges will have to register as “digital commodity exchanges” with the CFTC, with obligations to protect client funds, monitor markets, and report. More constraining than the de facto status quo, but radically more predictable.

For DeFi protocols

Structural victory. Non-custodial developers are exempted from money-transmitter status, so escape FinCEN jurisdiction. Truly decentralised protocols (Uniswap, Aave, Compound) now operate in a clear legal framework. The criminal risk weighing on developers (the Tornado Cash case) is neutralised for non-custodial architectures.

For ETFs and asset management

The spot crypto ETFs already approved (Bitcoin, Ethereum, and more recently XRP, Solana) now operate in a statutory rather than case-law framework. The conditions for approving new ETFs are clarified. BlackRock, Fidelity, Franklin Templeton and VanEck actively lobbied for this text.

For token issuers

Regulation Crypto creates a fundraising vehicle able to partly replace the ICOs (Initial Coin Offerings) of the 2017-2018 period, but this time in an explicit legal framework. US-based crypto startups could raise up to $50M a year for 4 years (cumulative cap $200M) without a full S-1 registration, while respecting disclosure obligations.

For stablecoins

The stablecoin market (USDT, USDC, RLUSD) now operates under a federal framework (combined with the already-adopted GENIUS Act). The prohibition of passive yields forces issuers to rethink their business models. Circle (USDC) and Ripple (RLUSD) are structurally more exposed than Tether (USDT), which operates mostly outside the United States.

For Layer-1 and Layer-2 innovation

Blockchains able to demonstrate their maturity (>20% decentralisation, absence of unilateral control) move under the CFTC. For Bitcoin and probably Ethereum, this is settled. For younger Layer-1s (Solana, Avalanche, Sui), certification becomes a major strategic process. Layer-2s (Arbitrum, Optimism, Base) are in a greyer zone.

For the market: the US geographic premium

The most important macro effect could be the return of capital and talent to the United States. Singapore, Dubai and Switzerland attracted tens of billions of dollars of crypto industry during the Gensler years. With a clarified and competitive US framework, this flow could reverse.

International comparison: where does the CLARITY Act stand?

The CLARITY Act is explicitly presented as a response to MiCA (Markets in Crypto-Assets Regulation), the European regulation that entered full application in December 2024. According to KuCoin Research, the bill “aligns with global efforts like MiCA and addresses risks such as terrorism financing”.

Key comparisons:

MiCA is more protective (consumer protection paramount, strict framing of CASPs, Crypto-Asset Service Providers)
CLARITY is more pro-innovation (more generous Regulation Crypto, DeFi explicitly protected)
Hong Kong and Singapore have comparable frameworks but with less retail penetration
The United Kingdom is more advanced on stablecoins (BoE) but lags on market structure

The CLARITY Act, if it becomes law, could give the United States back global regulatory leadership on digital assets, leadership lost during the Gensler years (2021-2025).

Risks and grey zones

Several serious technical criticisms deserve consideration:

1. The definition of “ancillary asset”: NASAA explicitly pointed to an internal contradiction in the text. The ancillary asset is defined as a subtype of network token (therefore a non-security digital commodity), but remains subject to an SEC certification. The text stipulates that its value depends on the “entrepreneurial or managerial efforts of others”, exactly the definition of a security per Howey. This ambiguity risks generating litigation.

2. The 20% decentralisation bar: a potentially gameable threshold. How do you verify a founder’s real holdings via multiple wallets? How do you count voting power in a DAO with complex governance structures?

3. The absence of ethics guardrails: if the Ethics committee does not take up the subject downstream, the final bill could leave open the scenario where a sitting president directly profits from the regulation he signs. This is unprecedented in the modern history of US financial regulation.

4. The fragility of the 60 Senate votes: without a substantial ethics agreement, several Democrats who voted favourably in committee could block the floor passage.

The realistic timeline

According to industry sources (CoinDesk, Fortune, The Block) and the senators’ own statements:

May-June 2026: Banking-Agriculture negotiations to merge the two versions
July-September 2026: Senate floor vote (60 votes needed)
September-October 2026: conference committee between House and Senate to reconcile
November 2026: final vote in both chambers
December 2026 – January 2027: presidential signature expected

Any agenda slippage risks pushing the final vote beyond the November 2026 midterms, which would potentially alter the balance of power in Congress.

Conclusion: a regulatory Rubicon

Beyond the technical details, the CLARITY Act represents a paradigm shift. It signs the end of the Gensler doctrine (“regulation by enforcement”, systematic assimilation of tokens to securities), in favour of a more predictable regulation by categorisation.

For the ecosystem, it is a signal of normalisation and maturity. Institutional capital, the real flows that can take the market from $4 to $20 trillion, needs a stable legal framework. The CLARITY Act, despite its imperfections, provides it.

For the text’s opponents, it is a gift to an industry that has not demonstrated its capacity to self-regulate, and that now benefits from a framework more permissive than the traditional banking system. The criticisms of Warren, NASAA and the AFL-CIO deserve to be taken seriously: an asset that can produce $1.4 billion of personal gains for the president in one year, in a grey regulatory zone, is not an ordinary industry.

History will judge the balance of the text. But one thing is certain: after ten years of turf war, the US crypto industry will finally operate in a structured federal framework. It is the most important regulatory event since the Securities Act of 1933.

Primary sources:

Senate Banking Committee, Section-by-Section Summary of the Digital Asset Market Clarity Act, 11 May 2026.
CoinDesk, “Clarity Act, in the flesh, unveiled by U.S. Senate Banking Committee before hearing”, 12 May 2026.
CoinDesk, markup liveblog, 14 May 2026.
TheStreet Crypto, “Markets surge as Clarity Act clears Senate committee in landmark 15-9 vote”, 14 May 2026.
Fortune, “The crypto industry’s Clarity Act hits a critical juncture”, 13 May 2026.
Bitcoin Magazine, “Senate Banking Committee Opens Historic Crypto Bill Markup”, 14 May 2026.
Senator Warren Opening Remarks, Senate Banking, 14 May 2026.
NASAA Statement on Senate Banking Committee Vote, 14 May 2026.
Gibson Dunn, “Update on the U.S. Digital Assets Regulatory Framework”, November 2025.
Davis Wright Tremaine, January 2026 analyses.
Latham & Watkins, US Crypto Policy Tracker (April 2026 update).
Patomak Global Partners, “The Future of U.S. Crypto Regulation”, August 2025.
The Block, “More than 100 amendments filed…”, 14 May 2026.
Tangem Blog, “Which Crypto Assets will Benefit from the CLARITY Act?”, February 2026.
CCN, “Tornado Cash, Epstein, Iran, Chokepoint 2.0: Warren Throws Everything at CLARITY Act”, 14 May 2026.