Bipartisan Majorities in Two House Committees Vote to Advance the Digital Asset Market CLARITY Act of 2025

With the Digital Asset Market CLARITY Act of 2025 advancing in Congress, a comprehensive digital asset market structure in the United States may finally be attainable.

On June 10, 2025, bipartisan majorities of the House Committees on Financial Services and on Agriculture (Committees) voted to advance the Digital Asset Market Clarity Act of 2025[1] (CLARITY Act), an updated version of a discussion draft the Committees circulated weeks earlier. The CLARITY Act, which has broadly been referred to as the crypto market structure bill, would establish a regulatory framework for digital asset market structure and direct the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to implement the legislation through regulations. For its part, the Senate Banking Committee announced on June 18, 2025 that it will hold a hearing titled Exploring Bipartisan Legislative Frameworks for Digital Asset Market Structure. A draft bill from the Senate Banking Committee is expected within the next several weeks.

In many ways, the CLARITY Act is modeled on the Financial Innovation and Technology for the 21st Century Act (FIT21),[2] which passed the US House of Representatives in 2024 but was not advanced by the US Senate. The CLARITY Act gives the lion’s share of jurisdiction over digital assets to the CFTC but reserves a number of important roles for the SEC, including jurisdiction over investment contracts that involve digital commodities. There are also notable differences between the CLARITY Act and FIT21.

In the CFTC space, the CLARITY Act would define “digital commodity” as “a digital asset that is intrinsically linked to a blockchain system, and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system.”[3] Additionally, the act would explicitly exclude from the definition of a “security” digital commodities sold pursuant to investment contracts, while still preserving the SEC’s jurisdiction over investment contracts that involve a digital commodity. It would establish three kinds of digital asset-related registration classes under the CFTC’s jurisdiction: Digital Commodity Exchanges, Digital Commodity Brokers, and Digital Commodity Dealers.[4] These would be roughly analogous to Designated Contract Markets, Futures Commission Merchants, and Swap Dealers, respectively.

As in FIT21, the CLARITY Act seeks to divide jurisdictional lines between the CFTC and the SEC based on decentralization. For example, under the CLARITY Act, a blockchain that is sufficiently decentralized—the CLARITY Act uses the term “mature blockchain system,” defined as a blockchain that, along with its related digital commodity, is not controlled by any person or group of persons under common control[5] —would fall under the jurisdiction of the CFTC rather than the SEC. A digital commodity issuer (or a digital commodity related person or affiliated person or decentralized blockchain system) may take advantage of this exclusion by filing a notice with the SEC that a given blockchain system is mature, or intended to be mature within a four-year period.[6] This is a potentially important (and potentially potent) gatekeeping role for the SEC, which would have an opportunity to review the notice and, if it disagrees, to object.

Aside from the overarching structural elements which closely resemble FIT21, there many other noteworthy provisions, including the following:

• Exclusion of Tokenized Commodities: Section 103 of the CLARITY Act states that the definition of digital commodity “does not include” a “digital asset that references” (among other things) an agricultural, excluded, or exempt commodity—which together cover every commodity—other than the digital asset itself.[7] The same text appeared in FIT21 and generated little discussion. This is surprising because tokenizing “real-word” assets has become one of the most prominent and promising use cases for crypto. The most likely outcome of such an exclusion would be the CFTC continuing to treat those digital assets as traditional commodities under the Commodity Exchange Act (CEA).
• New Exemption from Registration for the Offer and Sale of an Investment Contract Involving Units of a Digital Commodity: Similar to FIT21, the CLARITY Act would establish that the offer and sale of an investment contract involving units of a digital commodity may be exempt from registration under the Securities Act of 1933 (Securities Act) if the aggregate amount of units sold by the digital commodity issuer during the 12-month period preceding the date of the offering, including the amount received in such offering, is not greater than $75,000,000.[8] This represents a departure from the previous version of the CLARITY Act the Committees released as a discussion draft, which proposed a $150,000,000 cap, thus reducing the amount that a digital commodity issuer can raise pursuant to the exemption for the offer and sale investment contracts involving units of a digital commodity.
• Establishment of Provisional Registration Regime: The CLARITY Act establishes a provisional registration regime for digital commodity exchanges, digital commodity brokers, and digital commodity dealers, doing away with the discussion draft’s model of “Notice of Intent.”[9] The discussion draft contained one set of requirements for registered persons, defined to include futures commission merchants, introducing brokers, and SEC-registered brokers and dealers, and another for non-registered persons. The CLARITY Act changed the breakdown so that one set of requirements would apply to the more familiar category “registered entities” (designated contract markets and swap execution facilities), and a different set of requirements for all other persons. Firms that provisionally register with the CFTC would be required to comply with specific recordkeeping and disclosure requirements until the mechanism for CFTC registration is finalized.

Interestingly, the Committees scrapped a provision from the discussion draft that would have shortened the “actual delivery” window for leveraged retail digital commodity transactions. Like the current CEA’s provisions for leveraged commodity transactions with retail customers, Section 401(c) of the CLARITY Act would subject leveraged retail digital commodity transactions to regulation as if they were futures. The current CEA contains an exclusion from futures regulation for any leveraged retail commodity transaction that results in “actual delivery” of the commodity within 28 days.[10] The CFTC currently applies that 28-day window to digital assets.[11] While the discussion draft version of the CLARITY Act would have shortened the delivery window to 2 days for digital commodities, which would have aligned with the CEA’s treatment of such transactions in foreign currencies, the current version of the CLARITY Act removed this change.[12]

With respect to the SEC, similar to FIT21, the CLARITY Act seeks to provide regulatory clarity as to the application of the Securities Act to digital commodities via the “investment contract” definition of a security, which is the definition that the SEC and federal courts have generally applied to digital assets by applying the “investment contract” analysis first established in SEC v. Howey.[13] Primarily, the CLARITY Act would bifurcate the digital commodity from the security through which it may be sold by (1) clarifying that a digital commodity sold pursuant to an investment contract (which the CLARITY Act identifies as an “investment contract asset”) is not itself an investment contract; and (2) explicitly excluding securities or securities derivatives from the definition of a “digital commodity.”

In another example of a deviation from the discussion draft, the CLARITY Act’s language is more precise as to the specific security-related exclusions from the definition of “digital commodity” and separately identifies the following exclusions: (1) “any security other than a note, an investment contract, or a certificate of interest or participation in any profit-sharing agreement” and (2) “a note, an investment contract, or a certificate of interest or participation in any profit-sharing agreement that represents or gives the holder an ownership interest or other interest in the revenues, profits obligations, debts, assets or assets or debts to be acquired of the issuer of the digital asset . . . .” It appears that this additional language may be an attempt by the drafters to underscore that an issuer cannot avoid compliance with the federal securities laws simply by characterizing an asset as a digital commodity when, in fact, it represents an interest in the issuer, its assets, profits or debt. The CLARITY Act would further exclude secondary market transactions (i.e., transactions that are not made by the issuer) of a digital commodity that originally involved an investment contract from the application of the federal securities laws by providing that a secondary market transaction is not deemed an offer or sale of the original investment contract between the issuer and purchaser.

As noted above, the CLARITY Act also would provide for a transactional exemption from the registration requirements applicable to public offerings of securities for offers and sales of investment contracts involving units of digital commodities subject to certain conditions and limitations, including the maturity, or expected maturity, of the related blockchain, offering thresholds, issuer status, and disclosure obligations. In this respect, a digital commodity issuer may, in a 12-month period, offer and sell up to $75,000,000  of investment contracts involving units of a digital commodity that relate to a mature blockchain system or, a blockchain intended to become mature within four years of the first sale.

The CLARITY Act would restrict the availability of the exemption to US issuers only that are not development stage companies or investment companies, among other limitations; it does, however, explicitly permit the SEC to issue rules that specifically cover the offer and sale on investment contracts involving units of a digital commodity by foreign issuers. The CLARITY Act would mandate that digital commodity issuers that rely on the exemption provide certain disclosure requirements (e.g., source code, transaction history, development plans, risk factors and financial information) in offering documents and would provide the SEC with statutory authority to otherwise dictate the form and contents of such disclosure. The CLARITY Act would also require ongoing reporting obligations for such issuers, namely semi-annual and current reports.

As seen in FIT21, the CLARITY Act’s transactional exemption mirrors Regulation A, which is an exemption from Securities Act registration for limited public offerings that do not exceed either $20,000,000 million or $75,000,000 in a 12-month period (i.e., Tier 1 and Tier 2 offerings, respectively). The practicality and use of Regulation A was significantly increased as a result of a JOBS Act-mandated overhaul of the exemption in 2015, which may have provided a helpful roadmap for the CLARITY Act drafters. Similar to the scope of the CLARITY Act, Regulation A mandates the filing of offering documents with the SEC, ongoing reporting obligations, and preempts state securities laws (i.e., “blue sky” laws) for Tier 2 offerings. With respect to federal preemption, the CLARITY Act would amend Section 18(b) of the Securities Act to exempt digital commodities from state securities laws by mandating that a digital commodity be treated as a “covered security” for such purposes.

The CLARITY Act would also require the SEC to prescribe rules to address a digital commodity issuer that avails itself of the exemption with the expectation that the blockchain would become mature within four years, but fails to do so, including additional disclosure obligations and disqualification from using the exemption for further capital raising until maturity is achieved.

While there are many similarities, there are a couple of notable differences between the CLARITY Act’s transactional exemption, FIT21 and Regulation A. For example, FIT21 would have limited the availability of such offerings to unaccredited investors whose investment does not exceed the greater 10% of the investor’s annual income or net worth, which aligns with a similar requirement for Regulation A, Tier 2 offerings. The CLARITY Act’s transactional exemption does not appear to include a similar requirement and, thus absent the possibility of SEC rulemaking to that effect, offers and sales of digital commodities under the exemption could be made to any investor, including retail, without any income or other financial sophistication limitations. Broader investor access and the ability to solicit through the use of publicly filed offering documents has the potential to significantly expand digital commodity issuers’ access to the US capital markets.

Following the initial publication of the CLARITY Act, the House Financial Services Committee held a hearing that featured two former CFTC chairmen and a former SEC commissioner. The testimonies of each ranged from supportive to critical.

Former SEC Commissioner Elad Roisman supported the CLARITY Act, but recommended that any legislation require that the SEC and CFTC provide periodic updates to Congress regarding outstanding issues, and that Congress should consider requiring that the SEC and CFTC seek input from other governmental bodies such as the US Department of Treasury and Department of Commerce.[14]

Former CFTC Chair Rostin Behnam provided a largely neutral testimony, stating that the CFTC’s principles-based oversight model has served its regulated markets well. However, he believed that Congress should consider what level of funding is appropriate to meet the mandate of any legislatively enacted regulatory program. Notably, Chair Behnam suggested that Congress consider a permanent fee-for-service model for the CFTC, similar to the SEC.[15]

Finally, the hearing featured the testimony of former CFTC Chair Timothy Massad. Chair Massad provided some criticism of the CLARITY Act highlighting his fear that the bill may become outdated and, separately, that provisions of the bill may be easily exploited and the resulting regulatory arbitrage.[16]

Should the legislation pass both houses of Congress and be signed by the president, the CFTC and SEC will have substantial work to do to implement it with required regulations.

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