US CLARITY Act seeks to end crypto regulation chaos with new rules

A new bill aims to clarify the regulation of crypto assets in the US. The CLARITY Act seeks to resolve long-standing uncertainty over which agency oversees digital assets. It has already passed the House and cleared a key Senate committee but still faces hurdles before becoming law. The CLARITY Act builds on an earlier proposal, FIT21, which passed the House in 2024 but failed to progress in the Senate. The new version refines the framework to define crypto assets more clearly. It sorts digital assets into three groups: digital commodities, investment contract assets, and permitted payment stablecoins, each with distinct rules and regulators.

A key feature of the Act is its recognition that a token’s classification can evolve. As a network becomes more decentralised, oversight could shift from the stricter SEC to the lighter CFTC commodity rules. The bill also introduces stronger consumer protections, such as requiring exchanges to segregate user funds from company money to prevent past failures.

Despite its progress, the Act faces resistance in the Senate. Opponents argue it favours the crypto industry too heavily by allowing some assets to bypass securities law disclosures. Debates continue over ethics provisions, stablecoin regulations, and oversight of decentralised finance. If enacted, the CLARITY Act would provide clearer rules for crypto businesses and investors. Exchanges would operate under stricter consumer protections, potentially increasing market legitimacy. The bill could also attract more institutions and products to the crypto space by reducing regulatory uncertainty.