Status as of 24 August 2026. The CLARITY Act is not law. The House passed its version on 17 July 2025. The Senate has been rewriting it ever since, and released a merged 616-page text on 22 July 2026. A procedural vote on whether to even start Senate floor debate is scheduled for 15 September 2026. Nothing in this article has legal effect today. We will update this post as the bill moves.
For eight years the central question in US crypto regulation has been embarrassingly basic: who is in charge?
The SEC said many tokens were unregistered securities and sued accordingly. The CFTC said Bitcoin and Ether were commodities but had no real rulebook for spot trading. Exchanges registered with neither, because there was nothing obvious to register as. Projects launched offshore and geo-blocked Americans. Everyone waited for a court, and courts kept answering narrowly.
The CLARITY Act, properly the Digital Asset Market Clarity Act (H.R. 3633), is Congress's attempt to answer that question by statute instead of by lawsuit.
It is a market structure bill. That phrase matters, because it tells you what the bill is not. It is not a crypto tax bill. It is not a consumer bailout. It does not legalise anything that is currently fraud. It decides who regulates what, and under which registration regime.
The one-sentence version
Most tokens that trade on spot markets would stop being treated as potential securities and would instead trade as digital commodities under a new, comprehensive CFTC regime, while the SEC keeps jurisdiction over genuine securities, the fundraising that launched the token, ongoing issuer disclosure, and fraud.
That is the whole architecture. Everything else is detail about where the lines fall.
What the bill actually changes
1. It replaces the Howey test for network tokens
Right now, whether your token is a security depends on a 1946 Supreme Court case about orange groves. The analysis is fact-specific, expensive, and produces different answers depending on who is asking.
CLARITY writes a token-specific framework into statute. A qualifying network token gets a rebuttable presumption that it is an ancillary asset rather than a security. The issuer files tailored disclosures with the SEC, and once statutory conditions are met, can certify out of the ongoing disclosure regime entirely.
The conceptual move here is the important one. The bill separates the transaction from the asset. Selling tokens to raise money can carry securities-style obligations without permanently making every later trade of that token a securities transaction. Under current law, that distinction is argued case by case. Under CLARITY it would be written down.
2. The CFTC gets a real spot market rulebook
This is the structural centrepiece and the part most people underrate.
Today the CFTC has extensive authority over crypto derivatives, plus anti-fraud and anti-manipulation power in spot markets. What it does not have is a general licensing regime for spot exchanges. CLARITY creates one, with registration categories for digital commodity exchanges, brokers, dealers, qualified custodians, pool operators and trading advisers.
Registered venues would face listing standards, market surveillance, systems safeguards, conflicts-of-interest rules, financial resource requirements, mandatory reporting, a chief compliance officer, and customer asset segregation.
If you have ever wondered why a US crypto exchange looks less regulated than your stockbroker, this is the gap. CLARITY closes it.
3. Your assets have to be segregated and properly custodied
Customer assets held through a covered intermediary would generally have to be segregated from the platform's own funds and held with a qualified digital asset custodian meeting CFTC standards.
Read that in light of 2022 and it is obvious what it is for.
One important caveat. Digital commodities do not simply inherit the SIPC protection that applies when your stockbroker fails. The bill creates its own segregation, custody and bankruptcy protections instead. Those are real, and they are better than what exists today, but they are not the same thing as SIPC coverage. Do not assume otherwise, and do not let anyone imply it.
4. Software gets protected, but not everything calling itself DeFi
CLARITY draws a line based on function rather than branding. Validating transactions, relaying them, running nodes, operating oracles and similar technical work cannot by itself make you a regulated financial intermediary. Self-custody is protected, and Treasury guidance is constrained from routinely demanding identifying information about someone controlling a self-hosted wallet who is not a customer.
The other side of the line is sharper than the industry press generally admits. The text explicitly contemplates rules for "non-decentralized finance trading protocols". If you hold upgrade keys, control the front end, set fees, custody assets, or concentrate governance power, the fact that your product has a swap interface will not shield you.
The legal question stops being "is publishing code illegal" and becomes "what does this particular operator actually control". That is a better question. It is also going to be litigated for years.
5. Stablecoin yield gets restricted
Stablecoin issuers are already governed by the GENIUS Act, passed in 2025. CLARITY adds a rule aimed one level downstream: covered service providers cannot pay you interest or yield merely for holding a payment stablecoin, or structure something economically equivalent to deposit interest.
Bona fide rewards for actual transactions or activity remain allowed. The SEC, CFTC and Treasury are required to jointly define that boundary within a year of enactment.
Banks pushed hard for this, arguing stablecoin yield pulls deposits out of the banking system. Crypto firms pushed back. The compromise satisfies nobody completely, which is usually the sign of a real compromise.
6. There is an ethics division, with an expiry date
Covered senior federal officials and their spouses would be barred from issuing or sponsoring digital assets for consideration during the covered period, and intermediaries could not knowingly list assets issued in violation.
Two things worth knowing. It is a restriction on issuing and sponsoring, not a general ban on officials owning crypto. And the prohibition sunsets at noon on 20 January 2029. Supporters call it targeted. Critics, including Senator Warren, argue it leaves the substantive conflicts untouched.
What the bill leaves completely alone
This list is short and it matters more than the previous section.
Your taxes. There is no meaningful digital asset tax title. The Internal Revenue Code is not rewritten. There is no de minimis exemption for small purchases, no change to holding periods, no new basis rules. A token being reclassified as a "digital commodity" for market regulation does not change its federal income tax treatment, because the tax provisions are not being amended. We wrote a whole post on this, because it is the single most common misreading of the bill.
Form 1099-DA. Custodial broker reporting is already live and continues regardless. Gross proceeds reporting applies from 2025 transactions, and basis reporting phases in for covered assets acquired from 2026. CFTC registration is not a substitute for IRS reporting.
Tokenised securities. Putting a stock or a bond on a blockchain does not make it stop being a security. Wrapping a regulated financial arrangement in a token is not an exemption.
Fraud. All of it stays illegal. There is no immunity anywhere in this bill.
Where it actually stands
The honest answer is: closer than any previous attempt, and still not close enough to plan around.
- 17 July 2025. House passes H.R. 3633, 294 to 134.
- 29 January 2026. Senate Agriculture advances its own CFTC-focused bill.
- 14 May 2026. Senate Banking advances CLARITY 15 to 9, with two Democrats joining every committee Republican.
- 22 July 2026. Senator Lummis releases the merged 616-page Senate text. This is substantially bigger and different from what the House passed.
- 8 August 2026. Majority Leader Thune files cloture on the motion to proceed.
- 15 September 2026. That cloture vote is scheduled to ripen.
Be careful with that last date. Cloture on a motion to proceed is a vote about whether the Senate may begin debating the bill. It is not passage. Even a successful vote leaves amendments, final passage, and then either House agreement to the Senate version or a full bicameral reconciliation, before anything reaches the President.
Negotiators are still openly fighting over anti-money-laundering provisions, the ethics division, stablecoin rewards, and consumer protections. Any of those could reshape the text.
And if it passes, when does anything happen?
Not immediately. The general rule in the current text is that provisions take effect 360 days after enactment. Where a provision needs implementing rules, it takes effect on the later of that date or 60 days after the final rule is published.
So enactment in late 2026 means the machinery mostly arrives across 2027, and later still for the big joint rulemakings. The SEC has to build the ancillary asset disclosure and certification regime. The CFTC has to write listing, registration, custody and DeFi rules and then staff up to enforce them, having spent its entire institutional life focused on derivatives. The SEC, CFTC and Treasury have to jointly define what counts as a stablecoin reward.
A great deal of the actual policy is being handed to agencies to decide after the fact. That is where the next round of uncertainty lives.
What this means for you
If you hold crypto and file a US return, the practical takeaways are narrow and unglamorous.
Nothing about your 2026 filing changes. Not one thing. Keep doing what you were doing.
Do not read "CFTC regulated" as "safe." It means a venue has a licence and has to segregate your assets. It says nothing about whether the token you bought is any good, and it does not put a government guarantee behind your balance.
The record keeping problem gets no easier. If anything, the disclosure and reporting regime makes accurate cost basis more visible, not less. Exchanges will report proceeds and increasingly basis to the IRS. What they still will not know is what you paid for coins you bought somewhere else and transferred in. That gap is yours to close, and it exists whether or not this bill passes.
That last point is the one worth acting on. Everything else on this page is a bill that might become law in 2027. Your transfer history is a problem you have today.
Moonscape reconstructs cost basis across exchanges and wallets, so the number on your return matches the records behind it. That job looks exactly the same before and after CLARITY.
This is general information, not tax or legal advice. The bill described here is not law, and its text has changed repeatedly. Check current status before relying on any of it.