House committees pass CLARITY Act to clarify crypto regulation roles between SEC and CFTC - IcoHolder.
Today, the House Committees of Financial Services and Agriculture passed the bipartisan CLARITY Act (H.R. 3633), setting it for a full floor vote next. The Financial Services Committee advanced the measure with a 32-19 vote, while the Agriculture Committee passed it with a 47-6 vote.
Purpose and Goals of the CLARITY Act
The CLARITY Act aims to resolve the longstanding jurisdictional conflict among crypto regulatory agencies in the United States. It does this by redefining the responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Under the act, certain crypto assets will be regulated as commodities by the CFTC, while others will remain under the SEC’s authority as securities.
Developer Protections and Investor Safeguards
The bill includes limited liability protection for blockchain developers, effectively excluding them from money transmitter regulations. It also sets disclosure requirements, fund segregation rules, and conflict of interest guidelines to protect investors from crypto-related fraud.
Support for Decentralized Finance (DeFi)
In recognition of the importance of DeFi, the CLARITY Act introduces consumer safeguards for non-custodial wallet providers and peer-to-peer crypto transactions. These provisions aim to ensure security without compromising decentralization.
Criticism and Concerns About the Bill
Despite broad bipartisan support, the CLARITY Act has faced criticism. Representative Maxine Waters warned that some provisions could create conflicts of interest, pointing to close ties between political figures and the crypto industry. Brad Sherman expressed concern about potential industry bailouts and regulatory arbitrage. Former CFTC Chairman Timothy Massad described the bill as "complex," suggesting it may increase confusion rather than resolve regulatory ambiguity.
CFTC’s Expanded Role in Crypto Regulation
With the CFTC positioned as the primary crypto regulator, it will oversee digital commodities, including most cryptocurrencies and tokens traded on cash markets. This includes regulatory oversight of DeFi activities, exchanges, brokers, and spot markets for non-security digital assets such as Binance and Ethereum. The CFTC will also regulate stablecoin trading and custody on commodity exchanges, while the SEC’s role will focus mainly on enforcing anti-fraud measures in stablecoin transactions.
Next Steps for the CLARITY Act
Following approval from both committees, the CLARITY Act will move to the full House for debate and voting. If enacted, it will become the first comprehensive regulatory framework for crypto and digital assets in the United States. However, its future in the Senate remains uncertain, as the upper chamber continues to deliberate on ways to strengthen digital asset legislation.
