CLARITY Act Targets Crypto Regulation Overhaul in US

The Digital Asset Market Clarity (CLARITY) Act, passed in the U.S. House, proposes a dual regulatory framework. It differentiates between digital commodities, mature blockchain systems, and permitted payment stablecoins.

Key players include Rep. French Hill and supportive committees who advanced the bill. Aimed at providing clear regulatory guidance, it aligns SEC and CFTC regulations over digital markets. “The Digital Asset Market Clarity Act establishes clear, functional requirements for digital asset market participants, prioritizing consumer protection while fostering innovation.” — Rep. French Hill (R-AR), Congress.gov H.R. 3633

Enactment could alter compliance costs for crypto investment funds and reshape institutional capital allocation. This bill creates a structured framework for digital commodities and exchanges.

Financial sectors anticipate a shift in regulation, potentially affecting market stability and legal clarity. Business and political responses have varied, spotlighting the bill’s implications for innovation. According to the Binance Blog, “The draft, known as the Digital Asset Market Clarity Act (CLARITY), aims to end the regulatory tug-of-war between the SEC and the CFTC once and for all.”

Comparable efforts like the FIT21 Act similarly proposed resolving SEC and CFTC roles, aiming to enhance market stability. These efforts historically focus on jurisdictional resolutions.

The CLARITY Act suggests a regulated path forward. Based on past trends, it may reduce regulatory confusion and potentially curb systemic risks within crypto markets, as highlighted by the Bank Policy Institute in their commentary, stating that, “Crypto market-structure legislation like CLARITY…promote regulatory clarity that supports U.S. innovation and leadership on digital assets.”