A New Era for U.S. Digital Asset Regulation: An Analysis and Impact of the CLARITY Act

I. Legislative Overview and Core Content

In 2025, the U.S. House of Representatives passed the "Digital Asset Market Clear Act" (referred to as the "CLARITY Act") by an overwhelming majority, and the bill is currently under review in the Senate. If it is ultimately passed, it will mark an important step for the U.S. in the field of digital asset regulation.

The main goal of the CLARITY Act is to establish clear definitions and regulatory rules for digital assets, particularly delineating the regulatory scope of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Once the Act is passed, the CFTC will be responsible for overseeing exchanges, brokerage activities, dealers, and projects that meet the "mature chain" standards. The SEC will be responsible for securities-like assets and cryptocurrencies that have characteristics of investment contracts. The CLARITY Act, along with the GENIUS Act, constructs a comprehensive regulatory framework for digital assets, with the former focusing on blockchain infrastructure and asset attribute delineation, while the latter concentrates on stablecoin regulatory norms.

|-------|------------|----------------------------------------|---------------------------------------------------------------| | Category | Regulatory Authority | Core Definition | Key Regulatory Requirements | | Product Category | CFTC | Decentralized, permissionless, native tokens without financial rights (such as BTC, ETH) | Managed by CFTC trading platforms, brokers, dealers. Project parties do not need to register but must meet the "mature chain" standards and report architectural certification | | Securities | SEC | Tokens that have the nature of investment contracts or rely on the issuer for profit (such as tokens from the SAFT phase) | Issuers and platforms must comply with the Securities Act, register as broker-dealers/trading platforms, disclose financial and fundraising information, and accept SEC review | | Payment Stablecoins | CFTC + SEC | Tokens that are pegged to fiat currencies, have a 1:1 reserve, and are used for payments (such as USDC, USDT) | Liquidity regulation is mainly undertaken by the CFTC, while the SEC is responsible for anti-fraud; additionally, it must comply with the reserve, audit, and KYC/AML requirements of the GENIUS Act |

The core content includes:

1. Establish the definition of "digital goods"

The bill clearly classifies native crypto assets (such as BTC and ETH) that have achieved decentralization and operate on open blockchains as "digital goods," regulated by the CFTC, distinguishing them from securities regulated by the SEC.

2. Mature Blockchain System Recognition Mechanism

Introduce the "mature chain" standard, allowing specific projects to convert their tokens from "securities" to "commodities" once they meet conditions such as decentralization, governance decontrol, and open-source code, thus exempting them from the strict requirements of securities laws. The initial issuance phase (such as SAFT, ICO, IPO) is still subject to securities laws, but after the project completes its decentralization transformation, its tokens can be reclassified as digital commodities, regulated by the CFTC.

3. DeFi Project Compliance Exemption Clause

Exempt DeFi protocols that do not involve asset custody and have no centralized intermediary structure from registration obligations, and clarify that front-end developers and node operators do not bear financial intermediary responsibilities, reducing compliance burdens.

4. Information Disclosure and Insider Trading Restrictions

Platforms operating digital asset trading markets must register with the CFTC as a "digital asset exchange," including over-the-counter brokers and market makers. These entities are required to comply with strict federal regulatory requirements, such as minimum capital, risk management, trade records, regulatory reporting, and customer asset protection. Companies involved in both securities and digital asset businesses must register separately with the SEC and CFTC.

5. Legalization of traditional institutions' participation

Provide legal basis for traditional financial institutions such as banks and securities firms to offer custody and trading services for crypto assets, promoting wider access of traditional capital to the digital asset market.

2. Impact on the Cryptocurrency Market

1. The regulatory transparency of encrypted assets has improved, enhancing market confidence.

The CLARITY Act provides a clear compliance pathway for the cryptocurrency industry, ending the long-standing chaos of "law enforcement replacing regulation." Project parties and trading platforms can operate within a legal framework, enhancing the transparency of core market infrastructure, helping to prevent fraud and abuse, and boosting consumer trust. This will attract more institutional funds into the market, increasing liquidity and activity. For institutions, compliance can be achieved, avoiding risks similar to those in the previous SEC lawsuits. For consumers, the Act requires cryptocurrency issuers to disclose relevant information mandatorily and restrict insider trading, protecting consumers' legitimate rights and interests and reducing investment risks.

2. The direction of the U.S. digital asset regulatory system is moving towards "de-SECization"

Previously, the SEC defaulted most cryptocurrencies as securities, leading to regulatory disputes for multiple projects. The CLARITY Act builds a new regulatory framework for most fully decentralized assets through structural allocation, allowing them to no longer follow the SEC's regulatory system.

3. Traditional exchanges can obtain digital asset exchange licenses.

The CLARITY Act allows traditional securities exchanges to apply for a "digital commodity exchange" license. In the future, traditional trading platforms such as Nasdaq and the New York Stock Exchange may offer both stock and digital asset trading services simultaneously. Investors can seamlessly allocate traditional and crypto assets on the same platform, lowering user barriers and providing a compliant and trustworthy entry point for mainstream traditional finance to enter the crypto market.

3. Impact on DeFi Projects

1. Clarify the exemption mechanism to protect protocol developers.

As long as DeFi projects do not engage in intermediary business, their developers and operators are not required to register with the SEC or CFTC. Writing code, running nodes, or providing front-end interfaces is generally not considered as providing financial services.

• Non-custodial ≠ Intermediary: If the protocol does not custody user assets and does not provide traditional financial services, its developers, node operators, and frontend maintainers are not considered financial intermediaries and are not required to bear registration or licensing obligations.
• Code and operations are risk-free: Self-publishing smart contracts or wallet software does not constitute a securities issuer; its behavior is similar to technology releases and is not covered by financial regulation.

2. Introduce self-custody rights to protect DeFi users' property rights.

Article 105 and related provisions ensure users' right to self-manage digital assets, confirming that users can freely conduct peer-to-peer transactions through non-custodial wallets and legally enjoy control over their funds. This provides legal protection for DeFi users, allowing them to choose self-custody without fear of policy penalties.

• Legal custody freedom: Users can manage their assets using hardware or software wallets without relying on banks or third-party financial institutions.
• Autonomous trading rights: Users can independently initiate on-chain transfers, participate in DeFi protocol governance, and engage in liquidity mining without the need to register with KYC intermediaries.
• Establish the concept of U.S. sovereign digital rights: incorporate "controlling the private key means controlling the asset" into the legislative framework to ensure that actions on private chains are not considered illegal or require permission.

3. Impact on Representative DeFi Projects

Most DeFi projects' protocols operate in accordance with the CLARITY Act's definition of a "non-intermediary" role. Once the Act is passed, it is expected to obtain clear registration and intermediary exemption qualifications, leading to significant compliance benefits in the short term. However, this does not mean that DeFi is fully compliant. Many platforms' official tokens still face legal uncertainties, and whether they constitute securities depends on whether they possess the characteristics of an "investment contract." While the CLARITY Act provides regulatory clarity at the protocol level, it does not fully resolve compliance issues at the token level. Project teams still need to continue promoting transparency in governance structures, strengthening community-led governance mechanisms, and gradually decentralizing control to enhance token compliance and build a more robust legal firewall.

|----------|-------------|------------------------------------------------------| | Project | Protocol Operating Entity | Compliance Direction | | Certain DEX | Front-end interface + On-chain contract | The front-end does not custody assets, and the on-chain AMM model meets the "non-intermediary" criteria, requiring no registration with the SEC or CFTC. | | Some lending platform | Lending smart contract | The core lending contract does not custody assets and meets the exemption conditions at the protocol level. | | Staking Platform | Staking Service | Staked tokens belong to derivative rights. If not sufficiently decentralized, they may not be classified as digital assets, and their asset properties need to be further clarified. | | Certain AMM platform | AMM contract | The on-chain pool operates in a centralized algorithm-driven mode, with no custodial role, and the protocol layer is expected to be exempt from regulation. | Lending Platform | Lending Smart Contract | The lending agreement is driven by a smart contract, with no asset custody. | Cross-Chain Bridge | Cross-Chain Bridge Smart Contract | As a bridge protocol and liquidity pool provider, the protocol does not custody user funds or act as an intermediary, and is expected to enjoy DeFi exemption provisions. |

4. Future Development

As of July 23, 2025, the CLARITY Act has entered the review stage in the United States Senate, marking a key step in the legislative process for digital asset regulation. The biggest point of contention in the current legislative process is whether the Senate version can retain the key provisions regarding DeFi and token classification from the version passed by the House of Representatives. This will depend on the hearing procedures of the relevant Senate committees and subsequent amendments.

From an overall trend perspective, the CLARITY Act is expected to promote the establishment of a clearer, tiered regulatory framework for digital assets in the United States in the coming months: security tokens will be regulated by the SEC, while commodity tokens will fall under the jurisdiction of the CFTC. This framework will provide clear compliance pathways for blockchain developers, DeFi protocols, trading platforms, and others, not only helping to reduce legal uncertainty but also stimulating compliance innovation and attracting institutional funds, further consolidating the United States' leadership position in global digital asset policy formulation.

In addition, the linkage between the CLARITY Act and the GENIUS Act lays a dual-pillar foundation for the compliance system of the U.S. crypto market. The former focuses on asset classification and market structure, while the latter provides a safe harbor for stablecoin issuance and a registration exemption pathway. Together, they construct a complete compliance loop of "exemption first, transformation later, and classification ultimately." Once the CLARITY Act is officially passed and signed into law, it will mark the entry of the U.S. crypto asset legislative system into a comprehensive implementation phase, significantly enhancing the legitimacy and strategic position of crypto assets within the mainstream financial system in the United States.

Risk Warning

The information provided is for reference only and should not be construed as advice to buy, sell, or hold any financial assets. All information is provided in good faith. However, we make no express or implied representations or warranties regarding the accuracy, adequacy, validity, reliability, availability, or completeness of such information.

All cryptocurrency investments (including returns) are inherently highly speculative and involve significant risk of loss. Past, assumed, or simulated performance does not necessarily represent future results. The value of digital currencies may rise or fall, and there may be significant risks in buying, selling, holding, or trading digital currencies. You should carefully consider whether trading or holding digital currencies is suitable for you based on your individual investment goals, financial situation, and risk tolerance.