The Digital Asset Market Clarity Act of 2025, also known as the CLARITY Act, is a proposed U.S. law that is designed to clearly define how cryptocurrencies and other digital assets should be regulated.
At its core, the Act introduces the concept of “digital commodities.” These are blockchain-based assets whose value comes mainly from how they are used on a blockchain network and not by the promises made by a company or issuer. Examples include decentralized tokens that function as utilities or mediums of exchange.
Under the CLARITY Act, the Commodity Futures Trading Commission (CFTC) has the primary authority over spot markets for digital commodities. At the same time, the Securities and Exchange Commission (SEC) will continue to regulate investment contracts, which means that tokens that behave like traditional securities will still fall under securities law.
With this Act, a clear structure has also been created for crypto businesses. Trading platforms and intermediaries will need to register in specific categories, such as Digital Commodity Exchanges (DCEs), brokers, or dealers. These entities will have to separate customer funds from company assets.
This step will reduce any risk of misuse or loss if a firm fails as observed in cases like FTX, where customer deposits were improperly mixed with company funds and then used for internal purpose which took a toll on the company when the exchange collapsed.
Moreover, all the registered entities will also have to follow anti-money laundering (AML) and know-your-customer (KYC) rules under the Bank Secrecy Act, aligning crypto markets with existing financial compliance standards.
Why The CLARITY Act Emerged
The CLARITY Act aims to fix the confusion in the U.S. crypto regulation that has been caused by overlapping SEC and CFTC authorities, which has left traders and issuers uncertain about the rules.
According to Senator Cynthia Lummis, this state of uncertainty is something that has pushed many digital assets companies to move offshore.
For far too long, unclear rules have pushed digital asset companies offshore. Our market structure legislation changes that by establishing clear jurisdiction, strong protections, and ensuring America leads the way. Let’s get this done!
— Senator Cynthia Lummis (@SenLummis) January 2, 2026
The CLARITY Act was introduced in May 2025 by House Financial Services Chairman French Hill, the bill responds to industry calls for a clear market structure after years of enforcement actions and legal disputes.
Current Status as of January 2026
For the CLARITY Act to become law, it must first be approved by the Senate, either through committee markup and full Senate vote.
If the Senate passes a different version than the House, both chambers must reconcile the differences and pass a final identical bill. The legislation is then sent to the President, who can either sign it into a law or veto it.
As of January 12, 2026, the CLARITY Act is still a bill and not a law. The House passed it in July 2025 with a strong bipartisan support, voting294-134 after committee approval.
The Senate Banking Committee has scheduled a mark up for January 15, 2026, after earlier delays. However final passage remains shaky and uncertain as negotiations are still ongoing.
Roadblocks to Passage
The main roadblock as of now is the partisan disagreements, especially over conflict-of-interest rules that would bar senior officials from crypto businesses, an issue Democrats push and Republicans oppose.
The lawmakers are also stuck on DeFi oversight where they are debating how much supervision is to be imposed on DeFi platforms and their developers, highlighted by cases like Roman Storm, where legal action raised concerns about holding developers responsible for user activity.
Then there is disagreement about how different types of tokens, like securities vs. commodities, should be legally defined.
The lawmakers are also not sure if stablecoins should offer rewards or yields or not. This is one of the important issues where companies like Coinbase have indicated concerns and they may withdraw support for the CLARITY Act if the incentives are restricted in any way.
The final issue is ethics, with some lawmakers pushing to ban elected officials from profiting from crypto projects while in office, especially after Trump-affiliated entities launched a memecoin and an NFT, raising concerns about conflicts of interest.
Analysts also warn that there is a possibility that the bill could slip to 2027 unless compromises, such as delayed ethics enforcement, are reached.
What CLARITY Act Could Change for Crypto Users and Companies
If the CLARITY Act becomes a law, it would make crypto rules in the U.S. much clearer and safer for both companies and everyday users.
As of now, the crypto industry is not sure whether the SEC or the CFTC is in charge of the industry. This Act will fix this by saying Bitcoin-like assets fall under the CFTC, while tokens that look like investments stay under the SEC. This helps exchanges list tokens confidently and gives users more certainty.
The bill gives crypto platforms a clear way to operate legally in the U.S., reducing sudden shutdowns and making access more stable for users.
The Act also focuses on protecting customer money. Exchanges would have to follow strict rules on how user funds are stored and handled, lowering the risk of losses from misuse or exchange collapses.
After the implementation of the Act, all of the crypto platforms will have to follow anti-money laundering rules, and this step will create a safe space for existing and new users.
With clear rules and regulations, the crypto market could attract more traders and institutions, which may increase liquidity and make crypto trading all the way more smoother in the U.S. market.
Final Thoughts
Momentum around the CLARITY Act is building up. Senate Banking Chairman Tim Scott also confirmed through a statement that the market structure legislation is moving into markup. While Senator Cynthia Lummis has reposted the statement by Tim Scott on X stating “its happening.”
Chairman @SenatorTimScott is moving forward on digital asset market structure legislation – delivering clear rules that protect Main Street, keep innovation here at home, and safeguard U.S. national security.
Read his statement on next week’s markup ⬇️ pic.twitter.com/mWBTqwgVsS
— U.S. Senate Banking Committee GOP (@BankingGOP) January 10, 2026
If passed, the bill could bring in liquidity to U.S. crypto markets as there will be clearer rules and regulations for exchanges and institutions clear rules to trade under, reducing legal risk and encouraging more capital to stay onshore.
However, unresolved debates around stablecoins, DeFi oversight and ethics could still slow progress in the weeks ahead.
Also Read: CLARITY Act Could Reportedly Become Law by March
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