Crypto Faces New Rules as CLARITY Act Hits Senate Floor

• The Senate Banking Committee has released the draft CLARITY Act to define how crypto should be regulated in the U.S.

• The bill gives more authority to the CFTC and asks the SEC to adjust its rules for crypto markets.

• Lawmakers are requesting feedback from the public on issues like custody, trading platforms, and banking access.

The U.S. Senate Banking Committee has released the long-anticipated draft of its crypto market structure bill, known as the CLARITY Act. This legislative move comes shortly after the GENIUS Act became law, signaling a broader push from Congress to formalize digital asset regulation.

Digital Assets Reclassified, CFTC and SEC to Share Oversight

Led by Senator Tim Scott, the Committee’s draft bill proposes that digital assets, “ancillary assets,” should not be classified as securities in most cases. It clarifies that secondary market transactions involving these assets will not be treated as investment contracts. However, the bill also outlines scenarios where specific digital asset transactions could still qualify as investment contracts, keeping them under securities law scrutiny.

The bill assigns greater authority to the Commodity Futures Trading Commission (CFTC) to regulate digital commodities while directing the Securities and Exchange Commission (SEC) to adjust existing securities rules for crypto use cases. This dual oversight structure aims to protect investors while fostering innovation in the space.

The CLARITY Act also covers banking access, self-custody rights, transparency requirements, and anti-money laundering compliance. These provisions align with principles the Committee previously shared in early legislation discussions.

Request for Industry Feedback on Market Infrastructure and Custody

Alongside the draft bill, the Committee issued a formal Request for Information (RFI) to gather public input on key topics. These include regulatory clarity, investor protection, trading infrastructure, custody challenges, illicit finance, and banking reform.

The RFI raises targeted questions such as whether the ancillary asset concept is the right approach, how crypto trading platforms should be regulated, and whether crypto commodities and securities should be traded on the same exchange. It also addresses how to distinguish custody standards between crypto securities and non-securities.

Additionally, the Committee seeks input on whether banks should be explicitly authorized to engage in crypto custody, lending, and payments, and if additional powers should be considered.

The bill also contemplates how Congress should treat digital tokens issued outside the U.S. but traded domestically. Lawmakers are asking whether federal law should override conflicting state-level regulations and, if so, how to manage that transition.

The release of the CLARITY Act draft follows former President Donald Trump’s recent signing of the GENIUS Act into law. Coinbase CEO Brian Armstrong noted that the White House has urged Congress to pass the CLARITY Act by September, positioning it to become the second major crypto-focused law alongside pending stablecoin legislation.