Overview

The Digital Asset Market Clarity Act of 2025 (H.R. 3633, also referred to as the CLARITY Act of 2025) establishes a comprehensive federal regulatory framework for digital commodities, digital commodity exchanges, brokers, and dealers. The bill's central objective is to divide and clarify regulatory jurisdiction between the Securities and Exchange Commission and the Commodity Futures Trading Commission over digital asset markets, ending the prolonged regulatory ambiguity that has characterized the digital asset space. The legislation creates new registration regimes, customer protection standards, disclosure obligations, and market integrity rules tailored specifically to the unique characteristics of blockchain-based digital assets. It also addresses adjacent issues including permitted payment stablecoins, decentralized finance activities, non-fungible tokens, and the treatment of digital commodities under existing securities laws. By amending both the Commodity Exchange Act and the Securities Exchange Act of 1934, the bill integrates digital asset regulation into the existing federal financial regulatory architecture while creating new statutory authorities where existing law is insufficient. The bill further mandates interagency coordination, joint rulemaking, and multiple studies to inform ongoing regulatory development in this rapidly evolving sector.

Key Points

• Establishes dual SEC/CFTC jurisdiction over digital commodity markets with defined boundaries
• Creates registration requirements for digital commodity exchanges, brokers, and dealers
• Provides customer asset protection standards including segregation and custodian requirements
• Addresses decentralized finance, stablecoins, and non-fungible tokens within a unified framework
• Amends the Commodity Exchange Act and Securities Exchange Act of 1934 to integrate digital asset regulation
• Mandates joint SEC-CFTC rulemaking and interagency coordination on key definitional and operational issues

Legal References

• Commodity Exchange Act, 7 U.S.C. 1 et seq.
• Securities Exchange Act of 1934, 15 U.S.C. 78a et seq.
• Securities Act of 1933, 15 U.S.C. 77a et seq.
• Investment Company Act of 1940, 15 U.S.C. 80a-2(a)(36)
• Securities Investor Protection Act of 1970, 15 U.S.C. 78lll(14)
• Investment Advisers Act of 1940

Core Provisions

The bill's most significant structural change is the allocation of regulatory jurisdiction between the CFTC and SEC. The CFTC receives exclusive jurisdiction over contracts of sale of digital commodities in interstate commerce, while the SEC retains jurisdiction over digital commodity activities conducted by registered brokers, dealers, and national securities exchanges, as well as over the offer and sale of investment contracts involving digital commodities prior to a blockchain system achieving 'mature' status. A digital commodity is defined as a digital asset intrinsically linked to a blockchain system whose value is derived from or reasonably expected to be derived from the use of that blockchain system. The bill creates a pathway for blockchain systems to be certified as 'mature' under a new Section 42 of the Securities Exchange Act of 1934, after which the associated digital commodity transitions from SEC to CFTC jurisdiction. This maturity certification is central to the bill's jurisdictional architecture. The bill establishes mandatory registration for digital commodity exchanges under new Section 5i of the Commodity Exchange Act, requiring applicants to submit source code for related blockchain systems, risk management transaction details, and operational information. Digital commodity exchanges must segregate customer assets, maintain adequate financial and operational resources exceeding prescribed thresholds, establish transparent governance arrangements, designate a chief compliance officer, and adopt written policies to manage conflicts of interest. Exchanges must also establish rules protecting markets and market participants and are subject to federal preemption of state law with respect to their regulated activities. For digital commodity brokers and dealers, the bill creates registration requirements under new Section 4u of the Commodity Exchange Act and corresponding provisions of the Securities Exchange Act of 1934. Registered intermediaries must maintain daily trading records and audit trails, prohibit fraudulent practices, treat all customer money and property as belonging to the customer, and refrain from requiring customers to waive rights as a condition of doing business. The bill requires use of qualified digital asset custodians for holding customer assets and imposes specific financial resource requirements on all registrants. The bill provides an exemption for certain primary transactions in digital commodities under new Section 4(a)(8) of the Securities Act of 1933, capping exempt offerings at $75,000,000 in any 12-month period. Issuers relying on this exemption must file statements with the SEC and comply with disclosure requirements. The SEC is directed to issue rules applying disqualification provisions to this exemption. Permitted payment stablecoins may be brokered, traded, or custodied through registered brokers, dealers, alternative trading systems, or national securities exchanges under SEC jurisdiction. Decentralized finance activities are broadly excluded from the Act's requirements under new Section 15H of the Securities Exchange Act of 1934, though the bill clarifies this exclusion does not limit the activities described in Section 15I(a) of that Act or Section 4v(a) of the Commodity Exchange Act. The bill also establishes LabCFTC as a formal statutory entity within the CFTC, directed by a Commission-appointed Director, with obligations to submit annual reports to Congress by October 31 of each year after 2025. A parallel Strategic Hub for Innovation and Financial Technology (FinHub) is established within the SEC, required to be operational within 180 days of enactment and to provide annual engagement summaries to the Commission. The Comptroller General is directed to conduct studies on decentralized finance, non-fungible tokens, and digital commodity registrants owned by governments of foreign adversaries, with reports due to Congress within one year of enactment. The Secretary of the Treasury, in consultation with the CFTC and SEC, must conduct a study on foreign adversary participation in digital commodity markets.

Key Points

• CFTC receives exclusive jurisdiction over spot/cash market digital commodity transactions in interstate commerce
• SEC retains jurisdiction over investment contract offerings involving digital commodities pre-maturity certification
• New Section 42 of the Securities Exchange Act of 1934 establishes the mature blockchain system certification process
• New Section 5i of the Commodity Exchange Act governs digital commodity exchange registration
• New Section 4u of the Commodity Exchange Act governs digital commodity broker and dealer registration
• Section 4(a)(8) of the Securities Act of 1933 creates a new exemption for primary digital commodity transactions up to $75 million per 12-month period
• New Section 15H of the Securities Exchange Act of 1934 exempts decentralized finance activities from that Act
• Permitted payment stablecoins regulated under SEC jurisdiction when brokered, traded, or custodied by registered entities
• LabCFTC and FinHub established as statutory innovation hubs within CFTC and SEC respectively
• Multiple Comptroller General and interagency studies mandated on DeFi, NFTs, and foreign adversary participation

Legal References

• Commodity Exchange Act §1a (definitions)
• Commodity Exchange Act §4u (digital commodity broker/dealer registration)
• Commodity Exchange Act §4v (decentralized finance)
• Commodity Exchange Act §5i (digital commodity exchange registration)
• Commodity Exchange Act §5j (qualified digital asset custodians)
• Commodity Exchange Act §5k (exemptions for certain trading facilities)
• Securities Exchange Act of 1934 §15H (decentralized finance activities)
• Securities Exchange Act of 1934 §15I (digital commodity broker/dealer activities)
• Securities Exchange Act of 1934 §42 (mature blockchain system certification)
• Securities Act of 1933 §4(a)(8) (exempted primary transactions in digital commodities)
• Securities Act of 1933 §18(b) (covered securities)
• 17 C.F.R. §230.262 (disqualification provisions)

Implementation

Implementation responsibility is divided between the CFTC and SEC, with significant joint rulemaking obligations. The CFTC is the primary regulator for registered digital commodity exchanges and for spot market transactions in digital commodities, while the SEC oversees the offer and sale of digital commodities as investment contracts and regulates digital commodity activities conducted through registered broker-dealers and national securities exchanges. Both agencies are required to jointly issue rules further defining key terms, establishing procedures for delisting digital assets from trading, and addressing mixed digital asset transactions that implicate both agencies' jurisdictions. The bill establishes a phased implementation timeline. Within 180 days of enactment, persons acting as digital commodity exchanges, brokers, or dealers must file statements of provisional registration with the CFTC, and the SEC must establish FinHub. Within 270 days of enactment, the SEC must issue rules on transaction reporting and beneficial ownership disclosure obligations, and the CFTC must issue rules on further usage of digital commodities. Within 360 days of enactment, both agencies must promulgate all rules and regulations required by the Act, and the substantive provisions of the Act take effect. For provisions requiring rulemaking, the effective date is the later of 360 days after enactment or 60 days after publication of the final rule in the Federal Register. The CFTC must also issue rules within 360 days addressing qualified digital asset custodians and other operational requirements for exchanges. Reporting requirements are extensive. Digital commodity exchanges must make regular disclosures to their respective regulators, including financial condition reports, governance documents, and source code for related blockchain systems. Digital commodity brokers and dealers must submit periodic reports and maintain daily trading records with complete audit trails. Issuers of digital commodities that have filed statements under Section 4(a)(8) must provide ongoing disclosures to the SEC. LabCFTC must submit annual reports to Congress by October 31 of each year after 2025, and FinHub must provide annual engagement summaries to the SEC Commission. The CFTC and SEC must jointly submit a report to relevant congressional committees on the study of decentralized finance within one year of enactment. Enforcement mechanisms include the CFTC's authority to apply to a U.S. district court for appointment of a trustee if a digital commodity exchange's registration is suspended or revoked. The SEC retains jurisdiction and enforcement authority over disclosures made under the Act. Annual fees are charged to registrants, with penalties of 5 percent of the fee due per 30-day period of delinquency imposed on those who fail to pay within 30 days of the due date. Fee schedules must be published 30 days after enactment and updated 90 days before each subsequent annual fee due date. Both agencies retain their existing enforcement authorities under the Commodity Exchange Act and Securities Exchange Act of 1934 respectively, including the ability to suspend trading and take action against non-compliant registrants.

Key Points

• 180-day deadline: provisional registration filings due; FinHub established within SEC
• 270-day deadline: SEC rules on transaction reporting and beneficial ownership; CFTC rules on digital commodity usage
• 360-day deadline: all required rules promulgated; substantive provisions take effect
• Rulemaking provisions effective on later of 360 days post-enactment or 60 days after Federal Register publication of final rule
• Annual fee penalty: 5% of fee due per 30-day delinquency period
• CFTC may seek court-appointed trustee upon suspension or revocation of exchange registration
• Joint CFTC-SEC rulemaking required for mixed transactions, delisting procedures, and key definitional terms
• Comptroller General studies on DeFi, NFTs, and foreign adversary participation due within 1 year of enactment

Legal References

• Commodity Exchange Act §17(j) (registered futures association rule submission)
• Securities Exchange Act of 1934 §15I(a)
• Commodity Exchange Act §4v(a)
• 17 C.F.R. §230.262

Impact

The bill's most direct beneficiaries are retail and institutional customers of digital commodity exchanges, brokers, and dealers, who gain enforceable rights to segregation of their assets, prohibition on unauthorized use of their property, and access to qualified digital asset custodians. The mandatory customer protection provisions—including the requirement that all customer money, assets, and property be treated as belonging to the customer and held in a manner minimizing risk of loss—directly address the types of customer harm that occurred in high-profile digital asset exchange failures. The explicit right of U.S. individuals to self-custody of digital assets further protects consumer autonomy. Digital commodity issuers benefit from the new Section 4(a)(8) exemption, which provides a clear federal pathway for raising up to $75 million in a 12-month period without full Securities Act registration, subject to disclosure requirements and disqualification rules. The mature blockchain system certification process provides issuers with a defined regulatory endpoint at which their digital commodity transitions from SEC oversight to CFTC spot market regulation, reducing long-term regulatory uncertainty. The preemption of state securities laws for transactions conducted in compliance with the Act eliminates the compliance burden of navigating 50 separate state regulatory regimes. The administrative burden on digital commodity exchanges, brokers, and dealers is substantial. Entities must register with one or both federal agencies, maintain extensive records, submit periodic reports, segregate customer assets, employ qualified custodians, establish compliance programs, designate chief compliance officers, and pay annual fees. Smaller entities may face disproportionate compliance costs relative to their size, though the bill provides for exemptions from registration for certain persons who provide notice to the Commission and meet specified requirements. The bill does not specify appropriations for the CFTC or SEC to implement the new regulatory regime, creating potential resource constraints that could delay rulemaking and registration processing. The establishment of LabCFTC and FinHub as statutory innovation hubs is expected to improve regulatory engagement with the digital asset industry and facilitate more informed rulemaking. The multiple mandated studies—on decentralized finance, non-fungible tokens, financial literacy among digital commodity holders, tokenized securities, and foreign adversary participation—will generate a significant body of regulatory intelligence to inform future legislative and regulatory action. The bill does not include explicit sunset provisions, establishing the new regulatory framework as a permanent feature of federal financial regulation.

Key Points

• Retail and institutional customers gain enforceable asset segregation and custodian protection rights
• U.S. individuals retain explicit statutory right to self-custody of digital assets
• Issuers gain a $75 million annual exemption pathway under Securities Act §4(a)(8)
• Mature blockchain certification provides a defined regulatory transition from SEC to CFTC jurisdiction
• State securities law preemption eliminates multi-state compliance burden for qualifying transactions
• Compliance costs are significant for exchanges, brokers, and dealers, particularly smaller entities
• No explicit appropriations provided for SEC or CFTC implementation, creating potential resource gaps
• No sunset provisions; framework is intended as permanent federal regulatory infrastructure

Legal References

• Securities Act of 1933 §4(a)(8)
• Securities Act of 1933 §18(b)
• Securities Exchange Act of 1934 §42

Legal Framework

The bill rests on Congress's Commerce Clause authority over interstate commerce in financial instruments and its plenary power to regulate commodity markets and securities markets under established constitutional doctrine. The amendments to the Commodity Exchange Act and Securities Exchange Act of 1934 operate within the existing constitutional framework that has sustained federal financial regulation since the New Deal era. The bill does not articulate a novel constitutional basis but instead extends well-established federal regulatory authority to a new asset class. The statutory architecture involves significant amendments to multiple existing federal statutes. The Commodity Exchange Act is amended to add new sections governing digital commodity exchange registration (§5i), digital commodity broker and dealer registration (§4u), qualified digital asset custodians (§5j), decentralized finance exclusions (§4v), and LabCFTC (§307). The Securities Exchange Act of 1934 is amended to add new sections on mature blockchain system certification (§42), digital commodity broker and dealer activities (§15I), decentralized finance activities (§15H), and FinHub (§503). The Securities Act of 1933 is amended to add the new Section 4(a)(8) exemption and to treat digital commodities as covered securities under Section 18(b), preempting state blue sky laws for qualifying transactions. The bill's federal preemption provisions are explicit and broad. Section 404 provides that the Act supersedes any state or local law (other than antifraud provisions of general applicability) that regulates the offer or sale of digital assets in transactions conducted in compliance with the Act through provisionally registered entities. The CFTC is granted exclusive jurisdiction over registered digital commodity exchanges with respect to activities and transactions subject to the Act, further displacing state regulatory authority. These preemption provisions are consistent with the existing preemptive scope of the Commodity Exchange Act and federal securities laws but extend that preemption to a new category of assets and transactions. The bill creates significant new rulemaking authority for both the CFTC and SEC, including authority to impose additional requirements on digital commodity exchanges and affiliated brokers as necessary to protect market participants and promote fair trading. The SEC and CFTC are jointly authorized to issue rules on mixed digital asset transactions, delisting procedures, and further definitional matters. The bill also grants exemptive authority to both Commissions to provide appropriate relief for commodity pool operators, commodity trading advisors, and other market participants. Judicial review of agency actions under the bill would proceed under the Administrative Procedure Act's arbitrary and capricious standard, consistent with review of other CFTC and SEC rulemaking.

Key Points

• Constitutional basis: Commerce Clause authority over interstate financial markets
• Primary statutory vehicles: Commodity Exchange Act and Securities Exchange Act of 1934
• Digital commodities designated as covered securities under Securities Act §18(b), preempting state blue sky laws
• CFTC granted exclusive federal jurisdiction over registered digital commodity exchanges
• Broad federal preemption of state law for qualifying transactions, with carve-out for state antifraud provisions
• New joint SEC-CFTC rulemaking authority created for mixed transactions and definitional matters
• Exemptive authority granted to both Commissions for commodity pool operators, trading advisors, and others
• Judicial review of agency actions proceeds under APA arbitrary and capricious standard

Legal References

• U.S. Const. art. I, §8 (Commerce Clause)
• Commodity Exchange Act, 7 U.S.C. 1 et seq.
• Securities Exchange Act of 1934, 15 U.S.C. 78a et seq.
• Securities Act of 1933, 15 U.S.C. 77a et seq.
• Investment Company Act of 1940, 15 U.S.C. 80a-2(a)(36)
• Administrative Procedure Act, 5 U.S.C. 551 et seq.
• Securities Act of 1933 §18(b) (covered securities/preemption)
• National Securities Markets Improvement Act of 1996 (NSMIA) (preemption precedent)

Critical Issues

The most significant implementation challenge is the boundary between SEC and CFTC jurisdiction, which turns on the definition of 'digital commodity' and the maturity certification process. The bill defines a digital commodity as a digital asset intrinsically linked to a blockchain system whose value is derived from or reasonably expected to be derived from the use of that blockchain system, but this definition will generate substantial litigation over which assets qualify. The SEC has historically asserted that most digital assets are securities under the Howey test, and the bill's attempt to carve out a distinct 'digital commodity' category will face legal challenges from parties seeking to avoid SEC registration requirements by claiming commodity status. The maturity certification process under new Section 42 of the Securities Exchange Act of 1934 is the critical jurisdictional gateway, and disputes over whether a particular blockchain system qualifies as mature will be a major source of regulatory and litigation risk. The bill's treatment of decentralized finance presents both definitional and enforcement challenges. The broad exclusion of decentralized finance activities from the Act's requirements under new Section 15H creates a significant potential loophole, as market participants may structure activities to appear decentralized in order to avoid registration. The bill's definition of decentralized finance as blockchain applications allowing self-directed financial transactions without intermediaries does not provide bright-line criteria, and the CFTC and SEC will face difficulty distinguishing genuinely decentralized protocols from centrally controlled systems that claim decentralization. The Comptroller General study on decentralized finance acknowledges this uncertainty but defers resolution to future regulatory action. The absence of explicit appropriations for the CFTC and SEC to implement the new regulatory regime is a serious practical concern. Both agencies will need to hire specialized staff, develop new examination and enforcement capabilities, build registration and reporting systems, and conduct extensive rulemaking—all within tight statutory deadlines. The 360-day deadline for all required rulemaking is aggressive given the complexity of the issues involved and the need for interagency coordination. Failure to meet rulemaking deadlines will delay the effective date of substantive provisions, creating a period of regulatory uncertainty for market participants. The bill's preemption of state securities laws, while providing regulatory clarity, will face opposition from state securities regulators who have historically played an important role in protecting retail investors from digital asset fraud. The carve-out for state antifraud provisions of general applicability provides some protection, but the scope of this carve-out will be contested. Additionally, the bill's treatment of foreign adversary participation—addressed through studies rather than direct prohibitions—may be criticized as insufficient given national security concerns about foreign government ownership of digital commodity registrants. The bill's reliance on studies and future rulemaking to address several key issues, including tokenized securities, financial literacy, and non-fungible tokens, means that significant regulatory gaps will persist for years after enactment.

Key Points

• Definition of 'digital commodity' will generate extensive litigation over which assets qualify for CFTC versus SEC jurisdiction
• Mature blockchain system certification process under Securities Exchange Act §42 is a critical jurisdictional gateway subject to dispute
• Broad DeFi exclusion creates potential for regulatory arbitrage by centrally controlled systems claiming decentralization
• No explicit appropriations provided; CFTC and SEC face resource constraints in meeting aggressive rulemaking deadlines
• 360-day rulemaking deadline is aggressive given complexity and required interagency coordination
• State securities regulators will oppose broad preemption of state blue sky laws
• Foreign adversary participation addressed only through studies, not direct prohibitions, raising national security concerns
• Multiple key issues deferred to future rulemaking and studies, leaving regulatory gaps for years post-enactment
• Compliance costs may disproportionately burden smaller digital asset market participants
• Tension between the bill's DeFi exclusion and existing SEC and CFTC enforcement positions on digital asset intermediaries

Legal References

• SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (Howey test for investment contracts)
• Commodity Exchange Act §4v(a)
• Securities Exchange Act of 1934 §15H
• Securities Exchange Act of 1934 §42
• Securities Act of 1933 §18(b)
• Administrative Procedure Act, 5 U.S.C. 553 (notice-and-comment rulemaking)