The CLARITY Act gains support from two major law enforcement organizations—will it face a final vote before the August recess?

Do digital assets belong to securities or commodities? The answer to this question determines whether they are regulated by the SEC or the CFTC. Yet over the past decade, this boundary has remained persistently unclear.

The SEC uses the Howey test to determine whether an asset is an “investment contract,” thereby bringing it under the Securities Acts; the CFTC, meanwhile, argues that major crypto assets such as Bitcoin and Ethereum are commodities. The overlap and conflict between these two legal frameworks mean the same asset may face entirely different regulatory requirements in different scenarios.

The biggest dilemma facing the U.S. crypto industry is not that regulation is too strict or too lax, but that “nobody knows who regulates it.” At the level of statutory law, there is no unified definition of “digital commodities,” making it difficult for exchanges, brokers, and issuers to design a predictable compliance framework. Senator Cynthia Lummis has been blunt: “Software developers shouldn’t need a whole army of lawyers to know whether their code is legal.”

This uncertainty not only drives up compliance costs, but also pushes many crypto companies and developers outside the United States. The CLARITY Act was born in this context—aiming to end an “enforcement-driven” regulatory model through statutory law and to establish a comprehensive federal regulatory framework for digital assets.

The bill text is about to be released—what stage will the Senate move into?

Since CLARITY Act (full name: Digital Asset Market Clarity Act, i.e., the “Digital Asset Market Clarity Act”) was formally introduced by French Hill, Chair of the House Financial Services Committee, on May 29, 2025, it has passed several key milestones.

In July 2025, the bill passed the House by a bipartisan vote of 294-134. On May 14, 2026, the Senate Banking Committee advanced the bill by a vote of 15-9. On June 1, the bill was formally added to the Senate legislative calendar, putting it on track for a full Senate vote.

On July 13, 2026, the U.S. Senate ended its July 4 recess and officially reconvened. On July 14, Cynthia Lummis said in a Fox Business interview that after nearly 10 months of negotiations, the Senate version of the CLARITY Act text is ready, and is expected to be formally filed in the coming days.

Senate Majority Leader John Thune controls the legislative agenda and will decide when the bill will be brought to a full floor vote. Lummis expects the vote may be scheduled for the week of July 20. The Senate’s published 2026 calendar shows that the August work period runs from August 10 to September 11, meaning August 7 is the last scheduled meeting day before recess. From the Senate reconvening on July 13 to the start of the recess on August 7, there are only about 20 working days at most.

Two major enforcement organizations publicly endorse—how does enforcement resistance become political momentum?

A shift in the enforcement community’s stance is the most notable variable for the CLARITY Act in the near term.

On July 2, 2026, the National Organization of Black Law Enforcement Executives (NOBLE) publicly endorsed the CLARITY Act, becoming the first major enforcement organization to formally support this market-structure legislation. NOBLE National President Reneé Hall signed a support letter, emphasizing the need to clarify the regulatory framework while preserving enforcement tools. In the letter, NOBLE explicitly stated that the legislation “preserves existing criminal justice authority while adding investigative tools to digital asset cases.”

Nine days later, the Federal Law Enforcement Officers Association (FLEOA)—representing more than 34,000 active and retired federal officers across more than 65 agencies—submitted a letter to the Senate Banking Committee on July 10, publicly supporting the CLARITY Act. In its statement, FLEOA said the bill “makes substantial progress in balancing digital asset development with public safety.”

FLEOA’s support comes with clear conditions: requiring stricter accountability rules for decentralized finance platforms nationwide to prevent companies from evading regulation by packaging controlled services as decentralized; replacing the bill’s “specific intent” test with existing knowledge-based standards; and clarifying that the legislation will not weaken existing federal investigative authority.

The strategic significance of these two endorsements is that the biggest prior criticism from the enforcement community against the CLARITY Act was that it might weaken the ability to fight illegal finance. NOBLE and FLEOA’s public support directly rebuts that argument, offering hesitant Democratic lawmakers a support voice from the enforcement side (rather than the crypto industry). Resistance from law enforcement is seen as having cleared a key hurdle.

The SEC vs. CFTC jurisdiction fight—how the bill draws the regulatory boundary

The core mechanism of the CLARITY Act is to build a regulatory bridge between the SEC and the CFTC.

The bill establishes a three-tier asset classification system. Specifically, digital assets with a high degree of decentralization will be categorized as “digital commodities,” subject to CFTC exclusive jurisdiction—including comprehensive regulatory authority over spot markets. Bitcoin and Ethereum will fall into this category. Digital commodities are defined as digital assets inherently tied to the blockchain system, whose value primarily derives from the blockchain system’s use, and are clarified via exclusionary provisions to not include traditional securities, permissioned payment stablecoins, derivatives, and so on.

Assets that function like traditional securities are defined as “investment contract assets,” which remain under SEC oversight. Issuers must provide information such as audited financial statements, ownership, token economics, and more. Permissioned payment stablecoins are excluded from the definitions of “securities” and “digital commodities,” and are instead covered by an independent stablecoin regulatory framework.

The bill also explicitly requires that trading venues for digital commodities be registered with the CFTC and comply with rules such as customer asset segregation, risk management, and anti-manipulation. In addition, the bill provides a safe harbor for non-custodial software developers (Section 604, i.e., the “Blockchain Regulatory Certainty Act”), clarifying that developers who only publish code, provide self-custody tools, or maintain blockchain infrastructure do not constitute money-transmitting businesses.

The significance of this split goes far beyond the technical definitions itself—this is the first time the U.S. has established a comprehensive federal regulatory framework for crypto assets through statutory law.

A 60-vote threshold in the Senate—what three major obstacles does the bill face?

Although the CLARITY Act has gained initial bipartisan consensus, it still needs to overcome several hurdles before a full Senate floor vote.

In the U.S. Senate, most bills require overcoming a “filibuster” procedural hurdle. To end debate and advance to a vote, at least 60 votes are needed. Currently, Republicans have 53 seats in the Senate. Even if all Republican Senators vote in favor, the bill still needs at least 7 Democratic Senators to cross party lines to reach the 60-vote threshold. After the death of Senator Graham, the Republican seat count dropped to 52, and the latest estimates say it would require 9 to 10 Democrats to switch their support.

The bill currently faces three core controversies:

Ethics controversy. Democrats are asking to add restrictive provisions banning senior government officials—including the President—from conducting business dealings with the crypto industry. The backdrop is that President Trump’s latest financial disclosure shows that in 2025, he earned more than $1.4 billion in revenue from crypto-related businesses. Two Democratic Senators who previously voted for the version that passed the Banking Committee have already warned: if the ethics provisions are not handled properly, they will not support the final bill.

Developer responsibility. Section 604, regarding the developer responsibility exemption, is creating division within the enforcement system. Four enforcement organizations have warned that overly broad protections could make certain crypto-crime investigations more difficult. However, the U.S. Department of Justice subsequently challenged parts of those claims, saying that some warnings about compromised enforcement authority are not accurate.

Stablecoin yield. The banking industry strongly opposes allowing crypto companies to make payments to stablecoin holders that resemble interest. The American Bankers Association sent a letter to the Senate urging stronger provisions on stablecoin yield, criticizing that the bill has “ambiguities” that may accelerate capital outflows.

Passing probability and the time window—can it be voted on before August recess?

Time is becoming the biggest enemy of the CLARITY Act.

Galaxy Research has lowered the odds of passage in 2026 from 75% to about 50%. Data from prediction market Polymarket shows expectations have fallen to about 40%. Lummis has said: if it cannot be passed this year, the next real legislative opportunity may not come until 2030.

If the Senate cannot complete voting, coordination, and final passage before the August recess, the process cannot be finished within this Congress. After the next Congress (the 120th, 2027-2028) begins, the bill must be reintroduced and go through all procedures again, including committee review and debate.

Even if the bill passes the Senate, it still must be coordinated with the House version before being sent to the President for signing into law. The White House crypto adviser Patrick Witt has made clear that there is “no room for further delay.”

As of now, the final floor support from the two Democratic Senators who previously voted in favor in the Senate Banking Committee—Ruben Gallego and Angela Alsobrooks—remains conditional. Whether the enforcement endorsements from NOBLE and FLEOA can sway enough additional Democratic votes will be the key variable in the coming weeks.

If the bill becomes law, what structural changes will the U.S. crypto industry see?

If the CLARITY Act ultimately becomes law, its impact will extend well beyond the U.S.

First, the bill will end the “enforcement-driven” regulatory model and replace it with “institutionalized regulation.” Crypto companies will no longer need to rely on the SEC’s case-by-case enforcement to determine compliance boundaries; instead, they can design predictable compliance structures based on statutory law.

Second, the CFTC will gain exclusive jurisdiction over the spot market for digital commodities, meaning the U.S. will for the first time establish a complete federal regulatory framework for crypto assets. This will clear obstacles for institutional capital to enter through legitimate and compliant channels.

Third, the bill will bring digital asset service providers directly under the framework of the Bank Secrecy Act, introducing about 20 provisions covering anti-money laundering, sanctions, and enforcement authority. Exchanges and custodians will face requirements such as mandatory risk assessments, internal controls, and compliance officers.

Fourth, the bill establishes an independent regulatory framework for stablecoins and provides a safe harbor for non-custodial software developers, seeking a balance between protecting innovation and preventing risks.

Supporters believe the bill could provide a clearer legal framework for digital assets, helping distinguish cryptocurrencies that meet commodity standards from cryptocurrencies viewed as securities. Regulatory certainty is seen as one of the biggest gaps hindering broader institutional adoption.

Summary

The CLARITY Act is standing at a turning point in U.S. crypto regulation history. From the House passing it 294-134, to the Senate Banking Committee advancing it 15-9, to the subsequent endorsements by the two major enforcement organizations, the legislative path has already cleared the hardest stage. But the Senate’s 60-vote threshold, the ethics controversy, disagreements over developer responsibility, and the countdown to the August recess are still testing the bill’s ultimate fate. The next three weeks will determine whether the U.S. crypto industry enters a new era of institutionalized regulation in 2026, or continues to wait for the next legislative cycle amid “enforcement-driven” uncertainty.

FAQ

Q1: What is the full name of the CLARITY Act?

The full name of the CLARITY Act is the Digital Asset Market Clarity Act, i.e., the “Digital Asset Market Clarity Act.”

Q2: What legislative stage is the CLARITY Act currently in?

The bill passed the House in July 2025 by 294-134, and passed the Senate Banking Committee in May 2026 by 15-9. The Senate text is expected to be released in the coming days, and the target for a full floor vote is set for the week of July 20.

Q3: Which enforcement agencies have publicly endorsed the CLARITY Act?

The National Organization of Black Law Enforcement Executives (NOBLE) publicly endorsed it on July 2; the Federal Law Enforcement Officers Association (FLEOA) publicly supported it on July 10.

Q4: How many votes are needed in the Senate for the bill to pass?

A total of 60 votes are needed to overcome the “filibuster” procedure. Currently, Republicans hold 53 seats, so at least 7 Democratic Senators must support across party lines.

Q5: How does the bill define the SEC vs. CFTC regulatory split?

Digital commodities fall under CFTC jurisdiction, while digital securities fall under SEC oversight. Decentralized assets such as Bitcoin and Ethereum will be categorized as “digital commodities,” under CFTC exclusive jurisdiction.

Q6: What happens if the bill is not passed before the August recess?

If it is not passed, the entire process cannot be finished within this Congress. After the next Congress (2027-2028) begins, the bill must be reintroduced and go through all procedures again.

Q7: What impact will the bill have on the crypto industry after passage?

It will establish a complete federal regulatory framework for digital assets, end the SEC vs. CFTC jurisdiction fight, clear the way for institutional capital to enter, and bring crypto service providers into an anti-money laundering and sanctions compliance framework.