The fate of the Digital Asset Market Clarity Act of 2025 (CLARITY Act), a pivotal piece of legislation aimed at establishing a comprehensive regulatory framework for digital assets in the U.S., hinges on bipartisan support within the Senate Banking Committee. According to Alex Thorn, head of research at crypto investment firm Galaxy, the bill's progression is contingent upon garnering sufficient bipartisan backing in the Senate.
The CLARITY Act seeks to provide clarity on the jurisdictional boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), a long-standing point of contention in the crypto space. The House of Representatives passed the CLARITY Act with bipartisan support on July 17, 2025. The House Financial Services Committee approved the legislation 32-19, and the House Agriculture Committee passed it with a vote of 47-6. 216 Republicans voted for the bill along with 78 Democrats.
The CLARITY Act builds upon the principles of the earlier Financial Innovation and Technology for the 21st Century Act and introduces a dual-agency approach to oversight. Under the proposed framework, digital assets would be classified into three categories: digital commodities, investment contract assets, and permitted payment stablecoins. The SEC would regulate investment contract assets, while the CFTC would supervise decentralized commodities. The bill places the burden on the issuer to file a notice with the SEC and demonstrate that the digital asset in question meets decentralization requirements. This process serves as the SEC's key gatekeeping authority to ensure securities posing as commodities remain under its regulatory jurisdiction.
However, the path forward for the CLARITY Act is not without its challenges. The Senate Banking Committee is also preparing its own digital asset market structure legislation: the Digital Asset Market Structure and Investor Protection Act. Reconciliation between the House and Senate frameworks will be necessary, particularly around asset classification criteria, enforcement discretion, and scope of decentralized finance (DeFi) coverage. Market observers expect legislative convergence by Q4 2025.
Given the requirement for 60 votes in the Senate to overcome a filibuster, Republicans would need to win over at least seven Senate Democrats. Senate Banking Committee Ranking Member Elizabeth Warren (D-MA), who has consistently been critical of the digital asset industry, will almost certainly not be one of the seven, and in fact could be an impediment to moving a bill forward.
The CLARITY Act represents a significant step in building a coherent and functional regulatory framework for U.S. digital asset markets. By clearly defining asset categories and assigning regulatory responsibilities to the SEC and CFTC, the CLARITY Act reduces legal uncertainty for issuers, developers, and intermediaries, while strengthening investor protections and market integrity. The CLARITY Act's functional classification framework brings long-awaited clarity by distinguishing between digital commodities, securities-like assets, and stablecoins, enabling more predictable compliance paths. The $75 million exempt offering regime provides a structured path for early-stage digital commodity issuers to raise capital, tied to decentralization milestones and clear disclosure standards.
The lack of a unified regulatory framework has resulted in what many stakeholders describe as "regulation by enforcement". This dynamic has created legal uncertainty, constrained the participation of traditional financial institutions, and pushed innovation abroad.
