Federal market regulators prepare for crypto policy shift under Clarity Act

Congress spent years arguing about who should regulate crypto. Then it actually did something about it, and now federal regulators are scrambling to keep up.

The Digital Asset Market Clarity Act of 2025, introduced on May 29, 2025, by Rep. French Hill (R-AR), passed the House on July 17, 2025, with a bipartisan vote of 294-134. That comfortable margin sent a clear signal to the CFTC and SEC: the turf war is over, and it’s time to start building the rulebook.

What the Clarity Act actually does

At its core, the legislation creates a three-tier taxonomy for digital assets. Digital commodities, defined as fungible assets transferable on distributed ledgers, fall under exclusive CFTC jurisdiction. Investment contract assets stay with the SEC, which retains authority over primary sales. And permitted stablecoins get their own distinct category.

The bill also mandates that digital commodity exchanges, brokers, and dealers register with the CFTC. Customer protection provisions are baked in, including requirements for asset segregation. That last part matters more than it sounds: segregation means customer funds can’t be commingled with a company’s own assets, a problem that proved catastrophic in previous exchange collapses.

The Act requires joint rulemaking between the CFTC and SEC on key definitions and so-called mixed transactions, assets that don’t fit neatly into one bucket.

Regulators fill the gap

The legislation explicitly acknowledges the void in spot and cash market supervision that existed prior to its passage. Spot markets for digital assets, where buyers and sellers trade tokens for immediate delivery rather than through derivatives, had essentially no dedicated federal regulator. The CFTC had authority over crypto futures and derivatives but couldn’t touch spot trading. The SEC could pursue fraud cases but lacked a comprehensive framework for the broader market.

The Clarity Act changes that dynamic by giving the CFTC explicit jurisdiction over spot digital commodity markets. For the SEC, the legislation preserves its traditional role in overseeing securities offerings while narrowing the scope of what qualifies as a security in the crypto context.

An updated draft text released on September 14, 2026, merged elements from both House and Senate committee work, signaling that negotiations are continuing to refine the framework even after the initial House passage.

DeFi gets a carve-out

The bill includes exemptions for certain decentralized finance activities. The specifics of those exemptions will be shaped through the joint rulemaking process.

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