CLARITY Restart: U.S. Cryptocurrency Regulation Legislation Enters a Critical Window

This week, a critical window is opening for U.S. cryptocurrency regulatory legislation. The U.S. Senate Banking Committee has placed H.R.3633, the “Digital Asset Market Clarity Act of 2025” (CLARITY Act), on the executive session agenda for May 14, preparing to review this digital asset market structure bill. If the review proceeds smoothly, it will be an important step forward for the U.S. Congress in enacting legislation on the structure of the cryptocurrency asset market.

From FIT21 to CLARITY: Why the U.S. Needs a Market Structure Bill

The CLARITY Act did not appear out of nowhere. Previously, the U.S. House of Representatives passed the FIT21 bill in 2024, attempting to build a clearer regulatory framework for the digital asset market. The core idea of FIT21 is to establish a more explicit classification and regulatory path for digital assets within the existing securities law and commodities law systems.

After entering 2025, the chair of the House Financial Services Committee, French Hill, the chair of the House Agriculture Committee, G.T. Thompson, and others continued to push for legislation on the digital asset market structure, and on May 29, 2025, officially introduced the CLARITY Act.

The bill aims to address long-standing, unanswered foundational issues in U.S. digital asset regulation: which digital assets should be brought under securities regulation, and which are closer to commodities in nature; which market intermediaries—such as digital asset trading platforms, brokers, and custodians—should register with whom; how the regulatory boundary between the SEC and the CFTC should be drawn; and how new business models such as DeFi, self-custody wallets, and stablecoin reward programs should be incorporated into the regulatory framework.

That is why the bill is seen by the crypto industry as an important opportunity to end “regulatory uncertainty,” while also drawing ongoing scrutiny from the banking industry, consumer protection groups, and some Democratic lawmakers.

In July 2025, the CLARITY Act was passed by the U.S. House of Representatives with a vote of 294 in favor and 134 against, showing that it has achieved some bipartisan support at the House level. However, the real challenge for U.S. crypto legislation lies in the Senate. The Senate not only needs more complex bipartisan coordination, but also must address multiple issues, including banking, securities regulation, commodities regulation, anti-money laundering, national security, consumer protection, and political ethics. The CLARITY Act returning to review means the bill is entering a more critical coordination phase, but it does not mean the controversy has disappeared.

This year, U.S. regulators have also been creating a clearer policy environment to advance legislation. On March 17, 2026, the U.S. SEC released an interpretive document on how federal securities laws apply to crypto assets, clarifying how certain crypto assets and transactions should be treated under securities law. SEC Chair Paul Atkins said the interpretation is intended to provide market participants with clearer regulatory boundaries. The CLARITY Act has been brought back onto the Senate agenda in this context.

At present, the main disputes: regulatory boundaries, DeFi responsibility, and stablecoin yield remain key points of disagreement

The reason the CLARITY Act has gone through multiple rounds of discussion and delays is that it tries to address several foundational issues at the same time. The most central controversy is the regulatory boundary between the SEC and the CFTC.

Supporters argue that regulatory uncertainty around token attributes in the U.S. has been too high in recent years. As a result, companies have struggled to determine compliant regulatory paths for an asset after it is issued, traded, and circulated in secondary markets, causing many projects and trading activities to move overseas. The CLARITY Act seeks to make clearer distinctions between digital asset securities and digital asset commodities based on the digital asset’s function, issuance method, and market status, and then clarify the respective regulatory responsibilities of the SEC and the CFTC accordingly.

However, opponents or cautious parties worry that if some tokens are broadly shifted from securities regulation to commodities regulation, investor protection could be weakened. Especially in the early stages of project fundraising, information disclosure, insider holdings of tokens, and secondary-market trading—where the boundaries are not clear—if certain assets are quickly categorized as “digital commodities,” it could open up new opportunities for regulatory arbitrage.

The second controversy is DeFi and developer responsibility. Supporters of the CLARITY Act typically emphasize that self-custody wallets, open-source developers, node operators, and validators should not be simply equated with financial intermediaries, because doing so could suppress innovation in underlying technology. But regulators and some Democratic lawmakers are more concerned about the other side: if complex links exist among the protocol, the front end, governance tokens, liquidity incentives, and actual controllers, whether so-called “decentralization” could become a cover to evade anti-money laundering, sanctions compliance, and consumer protection obligations.

From current public discussions, the difficulty of DeFi regulation is that it is hard to apply the traditional financial intermediary logic of “who operates, who is responsible” in a straightforward way. Responsibility boundaries among protocol developers, front-end operators, liquidity providers, governance participants, and end users are not clearly defined. If rules are too strict, technical development activities might be mistakenly targeted as financial business activities; if rules are too loose, gaps could be left in the institutional coverage of high-risk financial activities.

The third controversy—the most immediate focus of negotiations—is stablecoin yield or reward mechanisms. One important arrangement under discussion is to prohibit paying interest-style reward incentives on idle stablecoin balances, while allowing rewards related to trading usage. This arrangement is intended to ease the banking industry’s concerns about stablecoins absorbing deposits, while preserving some commercial operating space for crypto platforms.

This issue may seem technical, but in fact it touches on how benefits will be distributed in future financial infrastructure. Banks worry that if stablecoin issuers or trading platforms can provide users with near-yield through “rewards,” stablecoins could evolve from crypto trading settlement tools into substitutes for deposits in retail and corporate cash management. This would directly affect the deposit base of banks and the competitive landscape of traditional payment systems.

But for crypto firms, stablecoin rewards are not necessarily equivalent to bank interest; they may be part of payment networks, user growth, and platform ecosystems. If the ban is overly broad, domestically compliant stablecoin companies could be disadvantaged when competing with offshore platforms. As a result, the dispute over stablecoins is not simply about yield—it is a struggle among the banking system, payment networks, and on-chain finance for the “digital dollar” entry point.

The fourth controversy is anti-money laundering and consumer protection. Some Democratic lawmakers still worry that the bill does not provide sufficient safeguards for anti-money laundering, and that advancing the bill will require winning support from more Democratic lawmakers. This means that even if the CLARITY Act achieves some consensus at the level of market structure, its enforcement, compliance, and risk-mitigation provisions may still become key points in subsequent negotiations.

Future expectations: U.S. crypto regulation may shift from enforcement-driven to institutional competition

Looking ahead, there are at least three possible paths for the CLARITY Act during this week’s consideration. The first is that it passes the committee relatively smoothly, even if accompanied by some amendments. This would mean a temporary, acceptable balance forms among stablecoin rewards, market structure, and Democratic concerns, and would significantly increase the likelihood of moving on to a full Senate floor vote later.

The second is that the committee moves it forward but disagreements become public, meaning the bill does not immediately stall, but instead enters a longer cycle of amendments and negotiations. This kind of scenario is not uncommon in U.S. crypto legislation, because market structure bills often involve not only the crypto industry itself, but also intersect with banking, securities, commodities, and national security systems.

The third is that disputes over stablecoin, DeFi, anti-money laundering, or consumer protection are amplified again, causing the bill to return to a delayed state. More realistically, even if the CLARITY Act passes the committee, it does not mean it will become law. It still needs sufficient support in the Senate and must be coordinated with the House version. If the Senate is to continue advancing the bill, it will still need to secure support from at least some Democratic lawmakers.

But regardless of the outcome, the CLARITY Act being restarted already shows that U.S. crypto regulation is entering a new stage. If the U.S. ultimately forms institutional arrangements such as an SEC and CFTC division of responsibilities, regulation of digital commodity trading, stablecoin yield boundaries, a division of DeFi responsibilities, and protections for self-custody, other jurisdictions are likely to treat it as an important reference sample. Especially given that places like Hong Kong, Singapore, and the European Union have already advanced regulations on stablecoins, virtual asset service providers, and tokenized assets, once the U.S. fills its market structure legislative gap, global competition in digital asset regulation is likely to enter a higher-intensity phase.

Therefore, the key this week is not only whether the bill can move forward; it is whether the U.S. can find an implementable institutional balance among innovation, financial stability, investor protection, and risk prevention. The name “Clarity” emphasizes clarity, but true clarity does not come from a slogan—it comes from all parties being willing to write the unresolved issues of the past few years into law. For the U.S. crypto market, this may be a necessary step from regulatory uncertainty toward institutionalized competition.