The CLARITY Act Would Split Crypto Oversight between the SEC and the CFTC

The CLARITY Act is proposed federal legislation that would split digital asset market oversight between the SEC and the CFTC.

Updated September 2026 · Reviewed by the PipeFlare team

The CLARITY Act is proposed United States federal legislation that would establish a market-structure framework for digital assets by dividing regulatory oversight between the Commodity Futures Trading Commission and the Securities and Exchange Commission.

Federal legislation directly decides which agency regulates crypto exchanges, which tokens qualify as commodities, and how customer trading funds are segregated.

About clarity act explained

The CLARITY Act is proposed federal legislation designed to establish a comprehensive market-structure framework for digital assets in the United States. Formally introduced as the Digital Asset Market Clarity Act of 2025, the measure is numbered H.R. 3633 in the 119th Congress. The bill would divide regulatory authority over crypto trading between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Under current federal law, no single statute clearly assigns spot-market crypto trading to either agency. Market participants and agency officials have described this split as a source of legal uncertainty. H.R. 3633 introduces a statutory test to determine whether a given token is a digital commodity subject to CFTC oversight. Tokens that remain investment contracts would stay under SEC oversight. The bill also requires trading venues to register and segregate customer funds. It is not law yet.

How it actually works

The primary mechanism in the CLARITY Act is a legal standard separating digital commodities from securities. Under the statutory text of H.R. 3633, tokens tied to sufficiently decentralized blockchain networks qualify as digital commodities. These qualifying assets fall under the direct spot-market authority of the Commodity Futures Trading Commission (CFTC). Today, the CFTC regulates derivatives markets like futures and swaps. It can only police spot crypto markets for fraud and manipulation. H.R. 3633 gives the agency primary regulatory oversight of cash commodity trading. Conversely, digital assets that remain part of an investment-contract arrangement stay under the jurisdiction of the Securities and Exchange Commission (SEC). The SEC regulates securities markets and has historically brought enforcement actions against crypto ventures for offering unregistered securities.

Intermediary registration forms the second core pillar of the legislation. The CLARITY Act establishes mandatory federal registration requirements for digital asset exchanges, brokers, and dealers handling digital commodities. These entities would register directly with the CFTC. Registered venues must follow formal customer-asset-segregation rules to prevent commingling client deposits with operational funds. Trading platforms must also comply with public disclosure standards and conflict-of-interest mandates, so traders can see a venue's finances and confirm it is not quietly trading against its own customers. Before this bill, no single federal statute provided a direct registration path for spot crypto trading venues. The measure creates that formal home under CFTC supervision.

The bill builds directly on previous legislative efforts in the House of Representatives. In 2024, the 118th Congress passed a similar market-structure measure known as the Financial Innovation and Technology for the 21st Century Act (FIT21). FIT21 did not become law. The CLARITY Act serves as the 119th Congress's continuation of that effort. On July 17, 2025, the House of Representatives passed H.R. 3633 with bipartisan support. Following House passage, the bill moved to the Senate. Market-structure legislation like this typically falls under the joint interest of two committees. The Senate Banking, Housing, and Urban Affairs Committee holds interest over securities matters through its SEC oversight role. The Senate Committee on Agriculture, Nutrition, and Forestry holds interest over commodities through its CFTC oversight role.

The CLARITY Act serves a different regulatory function than the GENIUS Act. Enacted in 2025 as Public Law 119-27, the GENIUS Act governs payment-stablecoin issuance and liquid reserve requirements. That statute sets rules for issuers backing dollar tokens with cash and Treasury bills. In contrast, the CLARITY Act addresses secondary-market structure and agency jurisdiction across all digital assets. The two frameworks operate in parallel. A stablecoin issuer could follow issuance rules under the GENIUS Act while an exchange trading that stablecoin complies with market-structure rules under the CLARITY Act. For a wider view of federal stablecoin policy, review our stablecoin regulation overview.

The CLARITY Act does not set, target, or guarantee any token's price. It is a market-structure and jurisdiction bill. Market commentators sometimes cite regulatory clarity as a factor that could influence institutional participation in digital asset markets. Legislation itself does not predict market outcomes or set prices. The bill has not been enacted into law. Senate consideration remains pending. PipeFlare's own price-prediction coverage separately notes that the bill advanced out of the Senate Banking Committee but still needed 60 votes on the Senate floor, with stablecoin-yield and conflict-of-interest disputes stalling a final vote. Readers should verify current procedural actions directly on the Congress.gov official bill page.

Start here

1Verify the current legislative status of H.R. 3633 by checking the Congress.gov official bill page before relying on reported rules.
2Distinguish between market-structure news about the CLARITY Act and payment-stablecoin reserve coverage under the GENIUS Act.
3Review the Commodity Futures Trading Commission website for its current enforcement role.
4Examine enforcement releases on the Securities and Exchange Commission crypto-assets page to evaluate how existing securities laws apply to current market participants.
5Read our guide to KYC in crypto to understand exchange onboarding rules.
6Track future Senate committee actions on the Congress.gov official bill page rather than relying on unconfirmed social media posts.
7Floor votes are not price signals.

Strengths

The bill creates a statutory standard defining digital commodities, providing a clear jurisdictional boundary between the CFTC and the SEC.
Exchanges gain one federal registration pathway under the CFTC instead of inconsistent state rules.
Mandatory customer-asset segregation protects trader deposits by prohibiting trading platforms from commingling customer assets with firm operating funds.
Disclosure and conflict-of-interest rules apply uniformly to registered trading intermediaries, giving traders a way to check a venue's finances and confirm it is not trading against its own customers.

Common misunderstandings

The bill has not passed the Senate or been signed into law, so market participants must consult the Congress.gov official bill page to verify its status.
Decentralization tests require case-by-case regulatory judgment before a token is classified.
Dual agency administration requires coordinated oversight between the CFTC and SEC, which can lead to inter-agency jurisdictional disputes during implementation.
Compliance costs could burden smaller trading venues the most.

Common questions

What is the CLARITY Act in simple terms?

The CLARITY Act is proposed United States federal legislation numbered H.R. 3633 in the 119th Congress. It would create a market-structure rulebook for crypto assets. The bill divides federal oversight by giving the Commodity Futures Trading Commission authority over decentralized digital commodities and keeping investment-contract tokens under the Securities and Exchange Commission. It also requires crypto exchanges to register with the CFTC and segregate customer funds.

Has the CLARITY Act been signed into law?

No, the CLARITY Act has not been signed into law. The House of Representatives passed the bill on July 17, 2025, but it has not been enacted by the full Congress. Because legislative steps change over time, readers should check the Congress.gov official bill page for the bill's current Senate status.

How is the CLARITY Act different from the GENIUS Act?

The two bills regulate entirely different parts of the digital asset industry. The GENIUS Act focuses strictly on payment-stablecoin issuers, requiring one-to-one liquid reserves like cash and Treasury bills. The CLARITY Act governs broad market structure, determining whether the CFTC or SEC regulates trading platforms and tokens. A stablecoin issuer could be regulated under the GENIUS Act while an exchange listing that token follows the CLARITY Act.

Does the CLARITY Act affect Bitcoin price?

The CLARITY Act does not set, target, or forecast the price of Bitcoin or any other digital asset. It is a market-structure and regulatory-jurisdiction bill. Market commentators sometimes suggest that formal regulatory rules could encourage institutional trading, but the statute contains no price mechanisms. Market prices are determined by supply and demand rather than legislative text.

Which Senate committees handle the CLARITY Act?

Market-structure legislation like the CLARITY Act typically falls under the joint interest of two Senate committees. The Senate Banking, Housing, and Urban Affairs Committee handles securities matters through its oversight of the SEC. The Senate Committee on Agriculture, Nutrition, and Forestry oversees commodities through its oversight of the CFTC. Both committees examine portions of the bill matching their agency jurisdictions.

What is the digital commodity test under H.R. 3633?

The digital commodity test is a statutory standard used to classify digital assets based on blockchain decentralization. If a token runs on a sufficiently decentralized network, the bill treats it as a digital commodity subject to CFTC oversight. Tokens that fail this decentralization test and involve an investment-contract arrangement remain subject to SEC securities regulations.

What happened to FIT21?

FIT21 was a similar market-structure bill passed by the House of Representatives during the 118th Congress in 2024. It proposed a comparable regulatory division between the CFTC and SEC. FIT21 did not become law before that congressional session ended. Lawmakers then introduced the CLARITY Act in the 119th Congress to continue the effort.

Who does the CLARITY Act affect?

The bill primarily affects digital asset trading platforms, token issuers, and crypto intermediaries. Exchanges, brokers, and dealers would be required to register with the CFTC, meet conflict-of-interest standards, and segregate customer funds from operational accounts. Token issuers must assess network decentralization to determine whether their asset falls under CFTC commodity rules or SEC securities oversight. Everyday traders do not face new direct compliance filings, but they would interact with newly registered and supervised domestic trading venues. This page offers general regulatory information about pending legislation, not financial or legal advice.

Sources

Ready to put this into practice?

Exchange sign-up bonuses pay both you and a referrer after a qualifying trade.

See bonuses →