Crypto market structure legislation (CLARITY Act): what it is, where it stands, and why it matters

The CLARITY Act is the most serious effort so far to create a clear U.S. rulebook for how crypto markets will work. Particularly who regulates what, how trading platforms operate, and what disclosures apply to tokens. If passed, businesses would receive codified rules, and investor confidence in the asset class would likely grow, because the regulatory gap between crypto and traditional finance would materially narrow.

This bill matters most, though not exclusively, for crypto projects beyond Bitcoin, since Bitcoin already has significant historical precedent in the U.S. and is less affected by the bill’s biggest unresolved debates (like issuer-style disclosure requirements, stablecoin yield provision, and DeFi intermediary boundaries). 

The bill already passed the House mid-2025, but the current Senate version is now far more extensive than the House version. Meaning, the scope of “market structure” has grown into a much broader negotiation about detailed components of the crypto sector, with amendment after amendment getting tacked on to the bill’s text.

Last week, the Senate Banking Committee postponed its planned markup vote after industry disagreements piled up over these amendments, especially those perceived as favoring banks and traditional finance on the topics of stablecoin yield and tokenization. 

While undoubtedly a setback, I am still optimistic for market structure legislation to pass this year. Crypto legislation has faced turbulence before, with last summer’s GENIUS Act (stablecoin-focused law) as the prime example that even controversial bills can clear major hurdles when industry and government leadership decide a deal must get done. The motivation to pass a market structure law is not in question on either side of industry or policymakers. The risk however, is that 2026 is a mid-term election year, and Congress can run out of calendar time quickly, particularly beyond August. 

What the CLARITY Act is trying to do

U.S. finance rules were written for traditional financial assets, not those on open blockchain networks. That mismatch has created uncertainty for investors, businesses and regulators alike:

• entrepreneurs and businesses trying to build products legally,

• investors trying to understand risks,

• and regulators trying to apply decades-old laws to new technology.

The CLARITY Act is meant to codify rules to reduce that uncertainty for all parties. 

Crypto has grown into a major global market; it has shown to enable financial interactions previously infeasible; the goal is to create lasting guidelines that allow for continued growth without malpractice.

The main point for market structure is to answer:

• Which regulator oversees which part of crypto?

• What rules must trading platforms follow?

• What disclosures are required when tokens are issued, sold or traded?

Why market structure is the #1 crypto policy priority in Congress

Expanding on the previous section, there are three main reasons, in our view, this kind of legislation is treated as a top priority:

1) Regulatory clarity for entrepreneurs

The biggest problem in U.S. crypto policy has been that companies often don’t know what is allowed until after enforcement happens. The CLARITY Act is meant to create a clear pathway so entrepreneurs and businesses can build in the U.S. without guessing how regulators will interpret their business later. Many crypto projects have chosen to serve only customers outside of the U.S. for this reason.

2) Market integrity for investors

There is a gap between crypto market standards and traditional finance that can manifest into unease for professional investors. The plainest example is that there are still questions of what is considered a digital commodity versus a digital security. However, ambiguity also stems in part from crypto technologies allowing for novel financial transactions that were not previously feasible, and doing so at scale..

3) Durable protections against political turbulence

If crypto rules depend mostly on which officials are in charge, businesses and investors face long-term uncertainty. Market structure law is important because it can create guardrails that last across future political environments, reducing the chance of sudden reversals in how crypto is treated.

What the CLARITY Act actually does

The basic framework, passed by the House mid-2025, places more responsibility on the CFTC (Commodity Futures Trading Commission) for overseeing spot markets for digital commodities, while preserving the SEC (Securities and Exchange Commission) role over securities and investment contracts. That’s the simplest interpretation.

In practice, that would mean more consistent token classification rules, clearer registration pathways for trading venues, and disclosure requirements for token issuers. 

However, the bill’s scope has grown substantially, such that last week, the Senate Banking Committee released a full 278-page draft of the base text plus amendments, of which 100+ have been proposed. Thus, the bill is now far more encompassing than the core of “market structure”. 

One final note here is that this bill does not determine which crypto assets appear in ETFs. For more on the SEC view and listings guidance, see here.

Why the markup was postponed last week

Last week was expected to be a major milestone, with the Senate Banking Committee preparing for a markup vote, where a bill is debated, amendments are largely settled, and a vote determines whether the bill moves beyond committee to the broader Senate floor.

Instead, the markup was postponed.

The reason wasn’t that Congress suddenly decided it doesn’t want crypto regulation. The problem is that the bill has become a moving target, and industry disagreements intensified after draft amendments were introduced and perceived as shifting the bill in a way that benefits banks and incumbent financial firms.

In particular, crypto stakeholders were concerned of changes affecting:

• stablecoin yield, in relation to restricting rewards and limiting competition with banks,

• tokenization, particularly about whether the bill effectively blocks tokenized equities or favors traditional financial gatekeepers,

• and DeFi, with fears raised of more aggressive restrictions and surveillance

This is seemingly also where lobbying matters. Traditional finance groups have clear incentives to shape stablecoin and tokenization language to protect their competitive position. Crypto firms and DeFi advocates have the opposite incentive. They want clear but not unsavory rules that could make crypto services impractical or push them offshore. Those competing agendas appear to be showing up in amendment proposals, which stalled progress last week.

Closing thoughts

The CLARITY Act remains the clearest path to a lasting U.S. crypto rulebook. Last week’s postponement is evidence that, “how crypto should be regulated” is not a straightforward and simple issue. There is undoubtedly motivation that crypto should have codified rules represented in law. Yet, there are also competing interests and opinions of what those rules should be, and a difference between what is considered fair by both the crypto and traditional finance industries.

If the bill regains momentum by March and is viewed as having bipartisan support, it would likely be a positive market driver, in my view. It materially reduces long-term uncertainty for both industry and regulators, raises confidence in U.S. oversight for investors, and creates a clearer path for compliant business offerings. The question is whether lawmakers can finalize the compromise and vote it through before midterms elections in November 2026.