A legislative proposal to establish a regulatory framework for digital assets in the United States, the Digital Asset Market Clarity Act, has advanced through two key House committees with bipartisan support.
The bill, also known as H.R. 3633, cleared the House Financial Services Committee with a 32-19 vote and the House Agriculture Committee with a 47-6 vote, positioning it for consideration by the full House of Representatives.
The legislation seeks to end jurisdictional ambiguity by assigning regulatory oversight of digital assets to either the Securities and Exchange Commission or the Commodity Futures Trading Commission.
What is the CLARITY Act?
The CLARITY Act introduces a new classification system to delineate these regulatory responsibilities. It defines a “digital commodity” as an asset intrinsically linked to a blockchain system and places these under the primary authority of the CFTC, which would oversee spot markets for such assets.
In contrast, the SEC would retain its jurisdiction over the offering of “investment contract assets,” which are digital commodities sold or transferred as part of an investment contract.
This approach focuses on the nature of the transaction during capital-raising phases, rather than classifying the underlying asset itself as a security in perpetuity. A central element of the bill is the concept of a “mature blockchain system,” defined as a network not “controlled by any person or group of persons under common control.”
This criterion, which evolves from the “decentralized” concept in previous legislative efforts, would be used to determine when a project and its associated token could transition away from certain SEC disclosure requirements. The bill also contains language to formally protect the right of individuals to self-custody their assets and for developers of non-custodial software.
Proponents argue the legislation provides a necessary foundation for the digital asset industry to develop within the United States. In a statement, House Agriculture Committee Chairman Glenn “GT” Thompson said the bipartisan votes prove the timing is right for common-sense legislation that will finally bring certainty to the digital asset space.
The bill’s sponsor, Representative French Hill, framed the legislation as a way to provide consistency and move away from the “regulation by enforcement” approach that has characterized the U.S. crypto landscape.
Support for the bill
Industry organizations have also expressed support, with the Crypto Council for Innovation calling the bill’s advancement a “historic moment” for the digital asset industry and a major step toward clear rules that define agency roles and protect consumers. The American Bankers Association submitted a statement acknowledging the bill’s clarifications on matters such as the treatment of bank deposits.
Despite the support, the proposed framework faces criticism from former regulators and some lawmakers who question its effectiveness. Timothy Massad, a former CFTC Chair, has publicly warned that the CLARITY Act could create more confusion than clarity while potentially undermining decades of established securities law.
Per his analysis, the definition of a “digital commodity” is overly narrow and would “likely cover only a handful of tokens,” leaving a large portion of the market in a continued state of regulatory uncertainty.
While acknowledging that the bill addresses important questions, Jennifer Schulp of the Cato Institute noted that it relies too heavily on grants of discretion to the agencies.
Concerns also exist that the bill’s definitions could create incentives for regulatory arbitrage, such as the creation of blockchains with minimal utility simply to meet the criteria for CFTC oversight.
During committee markups, some Democratic members raised objections, citing worries about reduced financial safeguards and the potential for companies to evade regulation. The bill now awaits consolidation of the two committee versions before it can be scheduled for a vote on the House floor.
Mentioned in this article
Credit: Source link