New Era of Digital Asset Regulation: Analysis and Impact of the US CLARITY Act

Overview of Legislation and Core Content

In 2025, the U.S. House of Representatives passed the Digital Asset Market Clarity Act (referred to as the "CLARITY Act") by an overwhelming majority. The bill is currently under review in the Senate, and if it passes smoothly, it will mark an important milestone in the regulation of digital assets in the United States.

The CLARITY Act aims to establish clear definitions and regulatory rules for digital assets, particularly clarifying the regulatory boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). After the Act is passed, the CFTC will be responsible for regulating exchanges, brokerage operations, dealers, and projects that meet the "mature chain" standards, while the SEC will oversee securities-type assets and cryptocurrencies that have the nature of investment contracts. The CLARITY Act, along with the GENIUS Act, forms a comprehensive regulatory system for digital assets, with the former focusing on blockchain infrastructure and asset classification, and the latter concentrating on stablecoin regulatory norms.

| Category | Regulatory Authority | Core Definition | Key Regulatory Requirements | |------|---------|----------|-------------| | Product Category | CFTC | Decentralized, permissionless, native tokens without financial rights | CFTC manages trading platforms, brokers, and dealers. Project parties must meet the "mature chain" standards and report architectural certification | | Securities | SEC | Tokens with the nature of investment contracts or relying on the issuer for returns | Issuers and platforms must comply with the Securities Act, register as broker-dealers/trading platforms, and disclose financial and fundraising information | | Payment Stablecoins | CFTC + SEC | Tokens pegged to fiat currency, backed by 1:1 reserves and used for payments | CFTC is responsible for liquidity regulation, SEC is responsible for anti-fraud; must comply with the reserve, audit, and KYC/AML requirements of the GENIUS Act |

The core content includes:

1. Establish the definition of "digital goods"

Clearly classify the native crypto assets that have achieved decentralization and operate on an open blockchain as "digital goods," regulated by the CFTC, in contrast to the securities regulated by the SEC.

2. Mature Blockchain System Recognition Mechanism

Introduce the "mature chain" standard, allowing specific projects to convert their tokens from "securities" to "commodities" after meeting technical and governance thresholds such as decentralization, governance decontrol, and open-source code, thus exempting them from compliance requirements of securities laws.

3. DeFi project compliance exemption clause

Exempt DeFi protocols that do not involve asset custody and have no centralized intermediary structure from registration obligations, clarifying that front-end developers and node operators do not bear financial intermediary responsibilities.

4. Information Disclosure and Insider Trading Restrictions

The digital commodity trading platform must register with the CFTC as a "digital commodity exchange," including over-the-counter brokers and market makers. These institutions are required to comply with strict regulatory requirements, such as minimum capital, risk management, trading records, regulatory reporting, and customer asset protection.

5. Legalization of Traditional Institutions' Participation

Provide legal basis for traditional financial institutions such as banks and brokerages to offer custody and trading services for crypto assets, promoting the broader entry of traditional capital into the digital asset market.

Impact on the Cryptocurrency Market

1. The regulatory transparency of encrypted assets has improved, enhancing market confidence.

The CLARITY Act provides a clear compliance path for the cryptocurrency industry, ending the long-standing confusion of "enforcement instead of regulation." Project parties and trading platforms can operate within a legal framework, increasing the transparency of core market infrastructure, helping to prevent fraud and abuse, and enhancing consumer trust. This will attract more institutional funds into the market, improving market liquidity and activity. For institutions, it allows for further compliance, avoiding regulatory risks similar to those encountered previously. For consumers, the Act requires issuers of cryptocurrency products to disclose relevant information mandatorily and restrict insider trading, protecting consumers' legitimate rights and interests and reducing investment risks.

2. The trend of the U.S. regulatory framework for cryptocurrency assets is towards "de-SECing".

For a long time, the SEC has defaulted most cryptocurrencies as securities, leading several projects into regulatory disputes. The CLARITY Act builds a new regulatory framework for the vast majority of fully decentralized assets through structural allocation, allowing such assets to no longer follow the SEC's regulatory system.

3. Traditional exchanges can obtain digital asset exchange licenses.

The CLARITY Act allows traditional securities exchanges to apply for a "digital commodity exchange" license, and in the future, traditional trading platforms such as Nasdaq and the New York Stock Exchange may simultaneously provide both stock and digital asset trading services. Investors will be able to seamlessly allocate traditional and crypto assets on the same platform, lowering the user threshold and providing a compliant and trustworthy entry point for mainstream traditional financial capital into the crypto market.

Impact on DeFi Projects

1. Clarify the exemption mechanism to protect protocol developers.

As long as DeFi projects do not engage in intermediary business, their developers and operators do not need to register with the SEC or CFTC. Writing code, running nodes, or providing a front-end interface is usually not considered as providing financial services.

• Non-custodial ≠ Intermediary: If the protocol does not custody user assets and does not provide traditional financial services, its developers, node operators, and front-end maintainers are not considered financial intermediaries and are not required to bear registration or licensing obligations.

• Code and operations are risk-free: Self-publishing smart contracts or wallet software does not constitute a securities issuer, and its actions are similar to technology releases, not covered by financial regulation.

2. Introduce self-custody rights to protect DeFi users' property rights

Article 105 of the law and related provisions safeguard users' rights to manage their digital assets independently, confirming that users can freely engage in peer-to-peer transactions through non-custodial wallets and legally enjoy control over their funds. This provides legal protection for DeFi users, allowing them to choose self-custody without worrying about policy penalties.

• Legal custody freedom: Users can manage assets with hardware or software wallets without relying on banks or third parties.

• Autonomous trading rights: Users can independently initiate on-chain transfers, participate in DeFi protocol governance and liquidity mining without the need to register with KYC intermediaries.

• Establish the concept of U.S. sovereign digital rights: incorporate "controlling private keys means controlling assets" into the legislative framework to ensure that actions on private chains are not deemed illegal or requiring permission.

3. Impact on representative DeFi projects:

Most DeFi projects' protocols operate in a manner that aligns with the CLARITY Act's definition of a "non-intermediary" role, which is expected to obtain clear registration and intermediary exemption qualifications, leading to significant compliance benefits in the short term. However, this does not mean that DeFi has achieved comprehensive compliance. Many platforms' issued official tokens still face legal uncertainties, and whether they constitute securities depends on whether they exhibit the characteristics of an "investment contract." While the CLARITY Act provides regulatory clarity at the protocol level, it does not fully resolve compliance issues at the token level. To reduce the risk of platform tokens being classified as securities, project teams need to continuously promote transparency in governance structures, strengthen community-led governance mechanisms, and gradually decentralize control to enhance token compliance and build a more robust legal firewall.

| Project | Protocol Operation Entity | Compliance Direction | |------|------------|---------| | Some DEX | Front-end interface + On-chain contract | Front-end does not custody assets, on-chain AMM model meets "non-intermediary" conditions, no need to register with regulatory authorities. | | Lending Platform | Lending Smart Contract | Core lending contract does not custody assets, and is compliant with exemption conditions at the protocol level. | | Certain staking service | staking service | Its tokens belong to derivative rights, and if not sufficiently decentralized, may not be classified as digital goods; its asset attributes need to be further clarified. | | AMM platform | AMM contract | The on-chain pool operating model is driven by a centralized algorithm, with no custodial role, and the protocol layer is expected to be exempt from regulation. | | Certain Lending Agreement | Lending Smart Contract | The lending agreement is driven by a smart contract, with no asset custody. | | Cross-Chain Bridge | Cross-Chain Bridge Smart Contract | As a bridge protocol and liquidity pool provider, the protocol does not custody user funds and does not have intermediary nature, and is expected to enjoy DeFi exemption clauses. |

Future Development

As of July 23, 2025, the "CLARITY Act" has entered the U.S. Senate review stage, marking a crucial step forward in digital asset regulatory legislation. The main point of contention in the current legislative process is whether the Senate version can retain the key provisions regarding DeFi and token classification from the version passed by the House of Representatives. This decision will depend on the Senate committee's hearing procedures and subsequent amendments.

From an overall trend perspective, the "CLARITY Act" is expected to promote the establishment of a clearer and more tiered regulatory framework for digital assets in the United States within the next few months: security tokens will be regulated by the SEC, while commodity tokens will fall under the jurisdiction of the CFTC. This framework will provide clear compliance pathways for blockchain developers, DeFi protocols, trading platforms, and more, which will not only help reduce legal uncertainties but also stimulate compliant innovation and attract institutional capital, further consolidating the United States' leadership position in global digital asset policy making.

In addition, the linkage between the officially signed "GENIUS Act" and the "CLARITY Act" establishes a dual-pillar foundation for the compliance system of the U.S. crypto market. The former focuses on asset classification and market structure, while the latter provides a safe harbor and registration exemption path for stablecoin issuance. Together, they construct a complete compliance loop of "exemption first, transformation later, and final classification." Once the "CLARITY Act" is officially passed and signed into law, it will signify the full implementation phase of the U.S. crypto asset legislative system, significantly enhancing the legitimacy and strategic position of digital assets within the mainstream financial system in the U.S.

Risk Warning:

The information provided is for reference only and should not be considered as advice to purchase, sell, or hold any financial assets. All information is provided in good faith. However, we make no express or implied representations or warranties regarding the accuracy, adequacy, validity, reliability, availability, or completeness of such information.

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