The legislative drama of the U.S. “CLARITY Act” (Digital Asset Market Clarity Act), after more than a year of contention, has entered its most critical and most dramatic stage.

Bill core: ending the regulatory “gray zone”

The bill aims to end the long-running chaos in the U.S. crypto industry that relies on “enforcement-style regulation.” Its core is to clearly define the jurisdictional boundaries between the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) at the legal level.

Digital asset three-tier classification: explicitly dividing assets into digital commodities (e.g., BTC/ETH, under the CFTC), investment contract-type assets (early tokens, under the SEC), and licensed-payment stablecoins.

Dynamic regulation: allows “investment contract-type assets,” after achieving sufficient decentralization on blockchain networks, to “graduate” into “digital commodities.”

Clear rules: establishes systems such as exchange registration, issuer disclosure, and segregation of customer assets.

Legislative process: twists and turns

House passes: on July 17, 2025, passed with a high vote of 294 to 134.

Senate stalemate: the Senate proposed rewriting it, leading to a year-long tug-of-war.

Committee approval: in May 2026, the Senate Banking Committee approved the revised version by a vote of 15 to 9.

Final obstacle: the fight over “ethical provisions” has become the focus on whether the bill can pass before the August recess.

Trump’s crypto empire and “ethical provisions”

The controversy stems from Trump’s massive crypto interests. OGE disclosed that its 2025 crypto-related income exceeded $1.4 billion, mainly from World Liberty Financial (WLF) and the $TRUMP meme coin.

To calm the controversy, the bill added “ethical provisions”:

Ban on issuing tokens: bans officials such as the president and members of Congress, and their spouses, from issuing or sponsoring digital assets for profit during their term.

Position limits: officials must sell their holdings or place them into blind trusts; any sale over $1,000 must be disclosed.

Sunset clause: the ban automatically expires on January 20, 2029 (the day Trump’s term ends).

Controversial backdoor: the ban does not cover children (Trump’s business is managed by his son); enforcement power is assigned to the Department of Justice appointed by the president rather than the states, which Democrats criticized as “letting the president’s people enforce the laws that constrain the president.”

Bill outlook: grim odds?

Due to the above controversies, Polymarket’s market predictions show the probability of passage for 2026 fell from 82% in February to 24% by mid-July. Although it has since rebounded to around 39%, it is still far below expectations.

After the August recess, it will enter a midterm-election mode. If an agreement cannot be reached this week, the window for legislation this year will basically close. The future of this bill remains uncertain. $ETH ‌$BTC ‌