The U.S. House of Representatives recently advanced a major new "market structure" bill with overwhelming bipartisan support (294 votes in favor, 134 against, including 78 Democrats). The bill, known as the Digital Asset Market Clarity Act (H.R. 3633), would establish a clear regulatory framework for digital asset markets. It has now moved to the Senate, which is drafting its own version of market structure legislation, with the CLARITY Act serving as a reference.

If passed, this bill would establish clear "rules of the game" for blockchain systems, ending years of uncertainty that have stifled innovation, harmed consumers, and favored opaque bad actors over transparency-driven entrepreneurs. Much like the Securities Act of 1933, which established investor protections and fueled a century of capital formation in the U.S., the CLARITY Act has the potential to be a landmark law for its era.

When our legal framework fosters both innovation and consumer protection, America leads, and the world benefits. The CLARITY Act presents such an opportunity. While building on last year’s bipartisan 21st Century Financial Innovation and Technology Act (FIT21), it improves upon it in key ways—explained below—that entrepreneurs should understand, and why this bill is critical for aligning innovation, consumer protection, and U.S. national security.

Coupled with the recently signed GENIUS Act (more on its relevance later), the need for broader market structure legislation has never been more pressing.

Despite over a decade of crypto industry growth, the U.S. still lacks a comprehensive regulatory framework. Yet, cryptocurrency is no longer just a tech niche—it has become infrastructure. Blockchain systems now underpin payment systems (including via stablecoins), cloud infrastructure, digital marketplaces, and more.

But these protocols and applications were built without clear rules. The result? Legitimate entrepreneurs face regulatory whiplash, while speculators exploit legal ambiguities. The CLARITY Act would change that.

By providing transparent compliance pathways for projects and ensuring regulators have better tools to oversee real risks, the CLARITY Act (alongside the new stablecoin bill, GENIUS) would bring the already-massive crypto industry out of the shadows and into the regulated economy. This new legislation creates a framework for responsible innovation, much like the foundational laws of the 20th century that helped public markets thrive while protecting consumers.

Beyond compliance clarity, the bill also establishes clearer rules, giving entrepreneurs legal certainty to innovate confidently and operate domestically—reducing pressure to move overseas.

This legal clarity would unlock the next generation of decentralized infrastructure, financial tools, and user-owned applications—all built in the U.S. Ensuring blockchain systems are developed in America also safeguards global digital and financial infrastructure from reliance on, say, Chinese-controlled blockchains, while applying U.S. regulatory standards to core financial infrastructure now used beyond crypto.

The CLARITY Act establishes a framework for digital assets that confer ownership in blockchain systems.

Its "control-based" maturity framework allows blockchain projects to launch digital commodities into public markets without excessive regulatory burdens or uncertainty.

The bill ensures centralized crypto entities (exchanges, brokers, dealers) face rigorous oversight. These intermediaries must:

• Register with the Commodity Futures Trading Commission (CFTC);

• Comply with standards akin to traditional finance.

These requirements boost transparency in core market infrastructure, helping prevent fraud and abuse while strengthening consumer trust. They also close current regulatory gaps—where firms like FTX once operated unchecked in U.S. markets.

The CLARITY Act also includes direct safeguards, such as:

• Mandatory disclosures for digital commodity issuers, ensuring retail participants access key information;

• Insider trading restrictions, curbing early stakeholders from exploiting information asymmetry.

These measures also provide a clearer roadmap for entrepreneurs building decentralized systems, fostering innovation.

The CLARITY Act provides a structured path to transition digital asset oversight from the SEC to the CFTC.

Here’s how current law compares to the CLARITY Act (if passed) in addressing blockchain’s unique attributes:

Unlike the SEC’s 2019 "efforts-based" decentralization test, the CLARITY Act’s framework uses objective, measurable standards focused on who controls the blockchain system and its digital commodities.

This aligns with other regimes (e.g., money transmission) and eliminates perverse incentives that push developers to abandon projects for fear of being deemed "centralized." Critically, it helps legitimate builders thrive while making it harder for bad actors to exploit legal gray areas—including "performative decentralization."

Specifically, the framework:

• Increases oversight in a blockchain’s early stages (when centralized control poses securities-like risks);

• Reduces requirements as projects mature (when decentralization makes them commodity-like).

Unlike FIT21, the CLARITY Act lists seven objective criteria to determine when a blockchain is no longer controlled by individuals or groups (e.g., foundations), ensuring its native asset no longer carries securities-like risks. This approach protects consumers while unlocking blockchain’s full potential—and is easier for regulators and developers to apply.

In short, this framework is a major upgrade over traditional regulations, which were never designed for assets like blockchain tokens whose risk profiles can shift from security-like to commodity-like.

The CLARITY Act provides critical safeguards for DeFi by:

• Exempting DeFi protocols from intermediary rules (e.g., for exchanges, brokers);

• Setting DeFi standards: To qualify, systems must not act as intermediaries, avoiding risks regulators aim to curb.

It also gives DeFi projects legal clarity to:

• Launch tokens without high legal uncertainty;

• Adopt decentralized governance without fear of being labeled "centralized";

• Offer self-custody services, with explicit "self-custody rights" for individuals.

This levels the playing field for DeFi and paves the way for its integration into mainstream finance.

The CLARITY Act isn’t perfect. It focuses only on digital commodities, leaving out tokenized securities and derivatives. And while it exempts DeFi from federal intermediary rules, it doesn’t preempt state regulations, leaving the sector vulnerable to inconsistent or overreaching state policies.

These gaps should be addressed in the Senate, future legislation, or coordinated regulatory guidance (e.g., SEC/CFTC rulemaking).

The CLARITY Act represents a turning point—replacing ambiguity with a framework that fosters innovation while protecting consumers. Combined with the GENIUS Act, it could finally bring crypto into the regulated economy, ensuring America leads the next era of digital infrastructure.

Now, the Senate must act.

The U.S. House of Representatives recently advanced a major new "market structure" bill with overwhelming bipartisan support (294 votes in favor, 134 against, including 78 Democrats). The bill, known as the Digital Asset Market Clarity Act (H.R. 3633), would establish a clear regulatory framework for digital asset markets. It has now moved to the Senate, which is drafting its own version of market structure legislation, with the CLARITY Act serving as a reference.

If passed, this bill would establish clear "rules of the game" for blockchain systems, ending years of uncertainty that have stifled innovation, harmed consumers, and favored opaque bad actors over transparency-driven entrepreneurs. Much like the Securities Act of 1933, which established investor protections and fueled a century of capital formation in the U.S., the CLARITY Act has the potential to be a landmark law for its era.

When our legal framework fosters both innovation and consumer protection, America leads, and the world benefits. The CLARITY Act presents such an opportunity. While building on last year’s bipartisan 21st Century Financial Innovation and Technology Act (FIT21), it improves upon it in key ways—explained below—that entrepreneurs should understand, and why this bill is critical for aligning innovation, consumer protection, and U.S. national security.

Coupled with the recently signed GENIUS Act (more on its relevance later), the need for broader market structure legislation has never been more pressing.

Despite over a decade of crypto industry growth, the U.S. still lacks a comprehensive regulatory framework. Yet, cryptocurrency is no longer just a tech niche—it has become infrastructure. Blockchain systems now underpin payment systems (including via stablecoins), cloud infrastructure, digital marketplaces, and more.

But these protocols and applications were built without clear rules. The result? Legitimate entrepreneurs face regulatory whiplash, while speculators exploit legal ambiguities. The CLARITY Act would change that.

By providing transparent compliance pathways for projects and ensuring regulators have better tools to oversee real risks, the CLARITY Act (alongside the new stablecoin bill, GENIUS) would bring the already-massive crypto industry out of the shadows and into the regulated economy. This new legislation creates a framework for responsible innovation, much like the foundational laws of the 20th century that helped public markets thrive while protecting consumers.

Beyond compliance clarity, the bill also establishes clearer rules, giving entrepreneurs legal certainty to innovate confidently and operate domestically—reducing pressure to move overseas.

This legal clarity would unlock the next generation of decentralized infrastructure, financial tools, and user-owned applications—all built in the U.S. Ensuring blockchain systems are developed in America also safeguards global digital and financial infrastructure from reliance on, say, Chinese-controlled blockchains, while applying U.S. regulatory standards to core financial infrastructure now used beyond crypto.

The CLARITY Act establishes a framework for digital assets that confer ownership in blockchain systems.

Its "control-based" maturity framework allows blockchain projects to launch digital commodities into public markets without excessive regulatory burdens or uncertainty.

The bill ensures centralized crypto entities (exchanges, brokers, dealers) face rigorous oversight. These intermediaries must:

• Register with the Commodity Futures Trading Commission (CFTC);

• Comply with standards akin to traditional finance.

These requirements boost transparency in core market infrastructure, helping prevent fraud and abuse while strengthening consumer trust. They also close current regulatory gaps—where firms like FTX once operated unchecked in U.S. markets.

The CLARITY Act also includes direct safeguards, such as:

• Mandatory disclosures for digital commodity issuers, ensuring retail participants access key information;

• Insider trading restrictions, curbing early stakeholders from exploiting information asymmetry.

These measures also provide a clearer roadmap for entrepreneurs building decentralized systems, fostering innovation.

The CLARITY Act provides a structured path to transition digital asset oversight from the SEC to the CFTC.

Here’s how current law compares to the CLARITY Act (if passed) in addressing blockchain’s unique attributes:

Unlike the SEC’s 2019 "efforts-based" decentralization test, the CLARITY Act’s framework uses objective, measurable standards focused on who controls the blockchain system and its digital commodities.

This aligns with other regimes (e.g., money transmission) and eliminates perverse incentives that push developers to abandon projects for fear of being deemed "centralized." Critically, it helps legitimate builders thrive while making it harder for bad actors to exploit legal gray areas—including "performative decentralization."

Specifically, the framework:

• Increases oversight in a blockchain’s early stages (when centralized control poses securities-like risks);

• Reduces requirements as projects mature (when decentralization makes them commodity-like).

Unlike FIT21, the CLARITY Act lists seven objective criteria to determine when a blockchain is no longer controlled by individuals or groups (e.g., foundations), ensuring its native asset no longer carries securities-like risks. This approach protects consumers while unlocking blockchain’s full potential—and is easier for regulators and developers to apply.

In short, this framework is a major upgrade over traditional regulations, which were never designed for assets like blockchain tokens whose risk profiles can shift from security-like to commodity-like.

The CLARITY Act provides critical safeguards for DeFi by:

• Exempting DeFi protocols from intermediary rules (e.g., for exchanges, brokers);

• Setting DeFi standards: To qualify, systems must not act as intermediaries, avoiding risks regulators aim to curb.

It also gives DeFi projects legal clarity to:

• Launch tokens without high legal uncertainty;

• Adopt decentralized governance without fear of being labeled "centralized";

• Offer self-custody services, with explicit "self-custody rights" for individuals.

This levels the playing field for DeFi and paves the way for its integration into mainstream finance.

The CLARITY Act isn’t perfect. It focuses only on digital commodities, leaving out tokenized securities and derivatives. And while it exempts DeFi from federal intermediary rules, it doesn’t preempt state regulations, leaving the sector vulnerable to inconsistent or overreaching state policies.

These gaps should be addressed in the Senate, future legislation, or coordinated regulatory guidance (e.g., SEC/CFTC rulemaking).

The CLARITY Act represents a turning point—replacing ambiguity with a framework that fosters innovation while protecting consumers. Combined with the GENIUS Act, it could finally bring crypto into the regulated economy, ensuring America leads the next era of digital infrastructure.

Now, the Senate must act.