The Digital Asset Market Clarity Act of 2025, known as the CLARITY Act, has cleared the House and is set for Senate markup in January. The bill seeks to resolve jurisdictional disputes between the SEC and CFTC while addressing decentralized finance and state oversight. Key provisions include a DeFi carve-out and a preemption clause for digital commodities.
The CLARITY Act aims to clarify regulation of digital assets in the United States by ending the longstanding turf war between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). After passing the House with a lopsided vote, the legislation now faces Senate review in January, where lawmakers will debate its provisions and potential amendments.
A central feature is the DeFi carve-out, which exempts certain activities from being classified as intermediaries. These include compiling and relaying transactions, operating nodes or oracle services, providing bandwidth, publishing or maintaining protocols, participating in liquidity pools for spot trades, and offering software like wallets that allow users to custody their own assets. The bill specifies that such actions alone do not subject entities to regulation as exchanges or markets. However, this exclusion does not extend to anti-fraud and anti-manipulation authorities, preserving the SEC and CFTC's ability to address deceptive conduct.
The preemption clause treats digital commodities as covered securities under federal law, limiting states' ability to impose their own registration or qualification requirements. This move seeks to create a unified national framework, reducing the patchwork of state rules that have complicated compliance for crypto firms. The bill includes language preserving some state authorities, particularly in cases of fraud allegations.
Unresolved issues loom large. The DeFi provisions raise questions about where user interfaces end and trading venues begin, especially with front-ends that route orders or integrate blocklists. Liquidity pools, often permissionless and influenced by governance, may lack sufficient protections for retail investors, such as disclosure or conflict-of-interest controls. The bill's classification system separates initial investment contracts from secondary token trades, but its success depends on how courts and regulators interpret these boundaries.
If enacted, the SEC and CFTC must promulgate rules within 360 days, with some provisions delayed until rulemaking concludes. Supporters see it as a path to innovation, while critics worry it weakens state-level investor protections. The January markup will determine if the bill provides lasting clarity or invites new disputes.
