Congress’ s Bold Blueprint for Crypto Regulation
The Digital Asset Market Clarity Act of 2025 (H.R. 3633) introduces a long-awaited, comprehensive federal framework that delineates the responsibilities of the SEC and CFTC over digital assets. Its goal: to bring long-overdue clarity to the murky divide between crypto securities and digital commodities, allowing innovation to flourish under a unified, rational structure.
The Digital Asset Market Clarity Act of 2025 (H.R. 3633) creates the first comprehensive federal framework that divides responsibility for “digital commodities” and related market activity between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Its core goal is to resolve long‑running uncertainty over when a crypto‑asset is a security, when it is a commodity, and which federal rules therefore apply. The Act accomplishes this by: (1) embedding a detailed taxonomy of blockchain terminology directly into the Securities Act of 1933, the Securities Exchange Act of 1934, and the Commodity Exchange Act; (2) carving out a pathway under which fungible blockchain‑based assets that begin life as “investment contracts” can evolve into non‑securities called “digital commodities”; and (3) building parallel, registration‑based regimes for spot‑market intermediaries at both agencies. The statute is deliberately broad and is organized into five operative titles, each of which is summarized below.
Why This Bill Matters
For years, digital asset startups and exchanges have operated under a legal fog—unsure whether their tokens fall under the SEC’s securities regime or the CFTC’s commodity jurisdiction. This Act aims to codify definitions, create a structured token lifecycle, and open lawful fundraising paths for blockchain projects—all while preserving investor protections.
Additional context:
Title I Definitions, Rulemaking Mandates and Provisional Registration
Title I supplies the vocabulary on which the rest of the bill depends. It defines “blockchain,” “blockchain system,” “decentralized governance system,” “digital asset,” “digital commodity,” “mature blockchain system,” and more than a dozen ancillary terms, then cross‑incorporates them into the Securities and Commodity Exchange Acts so that both SEC and CFTC rely on the same dictionary. The title also confirms that a “permitted payment stablecoin” is neither a security nor a commodity, provided the issuer is subject to federal or state prudential supervision. To speed market access while rules are written, the section creates a one‑time, 180‑day window for trading venues, brokers, and dealers to file a “statement of provisional registration” with the CFTC; filing grants temporary legal status until full rulebooks take effect. Importantly, Congress preserves the individual right to maintain self‑custody wallets and to transact peer‑to‑peer so long as the conduct is otherwise lawful.
Title II Offers and Sales of Digital Commodities
Title II addresses the transition of an asset from security status to commodity status. An “investment contract asset” is recognized as a distinct, transferable token recorded on‑chain that, although originally sold pursuant to an investment contract, is itself not a security. Section 4(a)(8) of the Securities Act (a brand‑new exemption modelled loosely on Regulation A) permits primary sales of such tokens by an issuer as long as (i) aggregate fundraising stays below a CPI‑indexed US \$75 million cap in any 12‑month period, (ii) no purchaser ends with more than 10 percent of the supply, and (iii) the issuer files a detailed, token‑specific disclosure statement. The issuer must either certify that the underlying blockchain will be a “mature blockchain system” within four years or show that it already is one. Once a chain is certified mature—meaning no person or group exercises unilateral control—ongoing issuer reporting drops to a lightweight activity‑based disclosure. Title II also codifies that secondary‑market resales by persons other than the issuer are not securities transactions, that end‑user distributions such as airdrops are not securities offerings, and that affiliates face measured volume and seasoning limits when they dispose of tokens before and after maturity.
Title III SEC Registration Framework for Digital Commodity Intermediaries
Because many crypto trading platforms already fall within the SEC’s alternative trading‑system (ATS) regime, Title III keeps them under SEC oversight but re‑labels their on‑platform assets as “digital commodities” once statutory criteria are met. It authorizes ATSs to list digital commodities and “permitted payment stablecoins,” extends anti‑fraud jurisdiction to those instruments, modernizes record‑keeping, and empowers the Commission to tailor exemptions. For broker‑dealers and custodians, the title amends Section 15 of the Exchange Act so firms can hold digital commodities without violating customer‑protection rules, provided they use a “qualified digital asset custodian.” The title also expressly pre‑empts state blue‑sky registration of covered digital commodities, shields bona‑fide decentralized‑finance activity from exchange registration, and directs the SEC to study foreign adversary participation in U.S. digital‑asset markets.
Title IV CFTC Registration Framework for Digital Commodity Intermediaries
Title IV is the CFTC analogue. It gives the Commission exclusive jurisdiction over spot transactions in digital commodities (but not over derivatives, which remain subject to traditional CFTC futures and swap rules), then creates three new registrant classes: digital commodity exchanges, digital commodity brokers, and digital commodity dealers. Each class must meet custody, segregation, capital, risk‑management, and Bank Secrecy Act standards, and each must use qualified custodians. Exchanges must secure CFTC approval or self‑certify that a token meets statutory listing criteria; brokers and dealers must similarly register, with associated persons subject to fitness screens. The title encourages portfolio margining across SEC and CFTC products by requiring the agencies to publish a joint process for harmonized customer‑protection and net‑capital relief orders. A separate provision excludes genuinely decentralized finance protocols that cannot be unilaterally altered from exchange, broker, or dealer status.
Title V Innovation and Technology Improvements
Congress couples the new compliance architecture with technology‑forward mandates. Title V directs the SEC to update its tripartite mission statement to include “innovation” alongside investor protection, fair markets, and capital formation; makes the SEC’s FinHub permanent; codifies LabCFTC; and orders a series of reports on decentralized finance, non‑fungible tokens, consumer financial literacy in crypto, and the resiliency of critical market infrastructure. The studies are meant both to inform future rulemakings and to keep Congress apprised of technological change.
Implementation, Coordination and Savings Provisions
Across the Act, nearly every rulemaking mandate carries a 360‑day deadline, reflecting congressional urgency. A joint‑rulemaking clause compels the SEC and CFTC to harmonize definitions first, then tackle mixed digital‑asset transactions—those in which a security and a commodity token trade side‑by‑side. Savings clauses preserve all pre‑existing authority over futures, swaps, security‑based swaps, and security options; nothing in the bill lets a spot‑market registrant trade derivatives without securing the appropriate additional license. The Act extends the Bank Secrecy Act’s definition of “financial institution” to cover registered digital‑commodity exchanges, brokers, and dealers, and commissions a GAO study on offshore exchanges that evade comparable AML/CFT safeguards. Finally, federal law pre‑empts conflicting state regimes for entities that avail themselves of provisional or full CFTC registration, thereby delivering the nationwide uniformity stakeholders have long requested.
Practical Implications
If enacted, the CLARITY Act would lift a cloud that has stifled capital formation in U.S. crypto markets since 2017. Start‑ups would gain a predictable, disclosure‑based on‑ramp to sell tokens without registering as public companies, so long as they move expeditiously toward decentralized, non‑security status. Centralized exchanges and brokers would receive federal charters akin to those long enjoyed by futures commission merchants and ATSs, allowing them to operate across state lines under a single rulebook. Retail holders would benefit from higher baseline custody and disclosure standards, while still retaining the right to self‑custody and to use peer‑to‑peer networks. At the same time, the bill arms both the SEC and CFTC with broad anti‑fraud powers and preserves the full derivative and prudential tool‑kits already in place, limiting opportunities for regulatory arbitrage.
Conclusion
The Clarity Act of 2025 is the most structured attempt yet to reconcile crypto innovation with traditional regulatory regimes. By offering a transition path from securities to commodities and equipping both the SEC and CFTC with tools to supervise markets, it may unlock the next phase of U.S.-based crypto innovation—without sacrificing consumer protection.
Whether this balance holds will depend on the joint rulemakings to follow—and whether the Web3 ecosystem is prepared to meet the Act’s disclosure, custody, and registration requirements.
