With a new CLARITY hearing scheduled for Thursday, Congress is moving closer to a potential decision on how US crypto exchanges, stablecoins and digital financial assets should be regulated.
CLARITY could both trigger a far greater wave of institutional tokenization of financial assets and at the same time sharply reduce the scope for current passive stablecoin return models.
After years of “regulation through enforcement” and fragmented signals, the Digital Asset Market Clarity Act has become the most important tool for determining which market participants get to take the lead on exchanges, stablecoins and tokenized financial assets in the United States. Jefferies touts the bill as the clearest roadmap to date for U.S. market structure for digital assets, describing CLARITY as a possible turning point -- “an inflection point” -- for institutional tokenization. At the same time, Jefferies and a number of other voices warn that new regulatory rules are likely to involve tighter limits on stablecoin yields and stricter rules for exchanges and issuers
The Senate Banking Committee has now put up for committee consideration of the CLARITY Act on January 29, after many expected the process could slip out into late February or even longer. There, senators are actually supposed to debate, amend, and rewrite the legislative text before a committee vote. For the market, the main signal is that real legislative work is still being done on a concrete schedule, rather than the process slowly dying in procedures and postponements.
Even if the committee approves the bill, it must advance to consideration in the full Senate, then be reconciled with the House of Representatives' version and finally signed by the president before it can become law. Until that happens, CLARITY remains a draft -- but one that already serves as a frame of reference for how institutions and regulators position themselves for the next phase of U.S. digital asset rules.
Analysts are particularly following some key parts of the Clarity proposal, because in practice they define the “operating system” of the future for US crypto markets. At its heart is the question of classification: which digital assets should be treated as securities and which should fall under the commodity regime. In addition, the text is expected to introduce registration requirements for trading platforms, federal rules for issuers of payment stablecoins, and stricter retention and transparency requirements to protect consumers.
In simplified form, the main main features of the Clarity proposal can be summarized as follows:
Taken together, the goal is for these four main gripes to replace the current patchwork of state rules and overlapping federal signals with a statutory framework that exchanges, issuers and depository operators can actually build upon. The ambition is to give companies a more predictable path to registration and oversight, while giving authorities clearer tools to crack down on fraud, market manipulation and conflicts of interest.
In addition to its broad market structure, CLARITY has received a lot of attention for how the law will change stablecoins — dollar-pegged tokens that serve as a mainstay of the crypto market, a discussion we have among others discussed in a previous article. Coinbase CEO Brian Armstrong, in particular, has railed against recent drafts, which, among other things, limit the ability to pay interest or “rewards” on stablecoins and tighten decentralized finance and tokenized stocks. It raises an open question as to who ultimately wins the stablecoin race: the banks that want stricter frameworks, the centralized crypto players that feed off the stablecoin ecosystem, or the more decentralized solutions that lawmakers are still struggling to fit into a traditional financial regulatory framework.
Mature blockchain infrastructure and gradual regulatory advances have already laid much of the groundwork for a new tokenization wave in traditional finance. Jefferies argues that the rollout is now hindered to a lesser extent by technology, and more broadly by the absence of clear US market structure lines telling banks, exchanges and infrastructure players what they can safely do on‑chain. In that context, the Bank is raising the CLARITY Act as the clearest roadmap yet for what blockchain-based market infrastructure might look like, even if political hurdles make the outcome uncertain
Tokenization projects are already gaining momentum at major established players such as NYSE, Nasdaq, DTCC and Swift, which are testing blockchain-based trading, settlement and custody. Given clearer rules on the allocation of authority, what financial institutions can do, and what requirements apply to consumer protection, the transition from pilots to scaling becomes far easier.
For crypto-native companies, a Clarity regime is less a fine-tuning and more a strategic choice of where they actually build their business. Exchanges and infrastructure players that already prioritize compliance may face stronger regulatory barriers against new competitors because challengers have to go through the same registration, custody and reporting runs. At the same time, stricter treatment of stablecoin returns and a clearer framework around some DeFi activities could shift capital away from unregulated exchanges, experimental DeFi and some altcoins — and towards bitcoin exposure, solid balance sheets and infrastructure with strong cash flows.
For ordinary users and investors, a Clarity framework will in practice draw crypto much more closely into established finance. The distinction between digital assets and traditional finance is becoming less clear, and in some cases nearly gone, as the largest platforms register with federal oversight and have to follow stricter rules for handling customer funds. Large exchanges such as Coinbase and Kraken will have to meet detailed requirements for client fund segregation and risk management, while stablecoin issuers such as Circle and Tether will meet standards more similar to traditional banking supervision.
The advantage for users is that crypto assets held on regulated platforms are likely to be significantly safer from platform collapse, easier to follow up and easier to use in practice — which could make the field more attractive to more conservative investors as well.
At the same time, these assets will be more closely monitored, with more traceability and a greater likelihood that clients can get help from authorities in conflicts with companies. For the narrower group that keeps its own custody and uses weakly regulated or completely permission-free platforms, stricter rules against crime and abuse will make space narrower for parts of the market that have until now lived well in regulatory gray areas.
