What Is the CLARITY Act? The Crypto Market Structure Bill Explained

The CLARITY Act is the bill that would finally tell American crypto companies which regulator they answer to. It passed the House in July 2025 with a large bipartisan majority, then spent more than a year working its way through the Senate. On September 15, 2026, a procedural vote to start debate failed 49-50. If you run a business that accepts crypto, the outcome matters less to your checkout today than it does to the exchanges, brokers and wallets you rely on, and to non-custodial tools such as a non-custodial crypto payment gateway.

This guide explains what the bill does, where it stands in October 2026, how it differs from the GENIUS Act, and what it would change for merchants. It is a plain-language summary, not legal advice.

What the CLARITY Act Is

The full name is the Digital Asset Market Clarity Act of 2025, House bill H.R. 3633. Its purpose is to build a federal framework for the “market structure” of crypto: who can run an exchange, who can act as a broker, how customer assets must be held, and, most important, when a token is a security and when it is a commodity.

That last question has driven most of the legal fights in US crypto since 2017. The Securities and Exchange Commission (SEC) has argued that many tokens are investment contracts and therefore securities. The industry has argued that tokens on functioning, decentralized networks behave more like commodities. With no statute to settle it, the line has been drawn case by case in court.

The CLARITY Act draws that line in law. In short, it:

• gives the Commodity Futures Trading Commission (CFTC) authority over spot markets in “digital commodities”
• keeps the SEC in charge of fundraising and investment contracts, including token sales
• creates a path for a network to be certified as “mature” once it is sufficiently decentralized
• requires exchanges, brokers and dealers to register and to keep customer assets segregated
• protects software developers and service providers that never take custody of user funds

The House passed it 294-134 on July 17, 2025, one day before the President signed the GENIUS Act on stablecoins. The size of that vote, with dozens of Democrats joining Republicans, is why many people expected the Senate to follow quickly. It did not.

How We Got Here

The CLARITY Act did not appear from nowhere. It is the second serious attempt by the House to write crypto market rules.

The first was FIT21, the Financial Innovation and Technology for the 21st Century Act, which passed the House 279-136 in May 2024. FIT21 introduced most of the ideas that CLARITY now carries: a CFTC role for digital commodities, a decentralization test, and registration for exchanges. It never received a Senate vote, and it expired with that Congress.

Behind both bills is a long run of enforcement cases. Between 2018 and 2024, regulators brought actions against token issuers, exchanges and lending platforms, often arguing that a token was a security years after it had launched. Courts did not always agree with each other, and businesses were left reading court opinions to guess what was allowed. Several major cases were dropped or settled in 2025, but a change in agency priorities is not the same as a statute. The next administration could reverse course.

That is the core argument for the CLARITY Act: rules written into law last longer than enforcement priorities. Supporters on both sides of the aisle accept that argument. The disagreements are about details, and in a Senate that needs 60 votes, details are enough to stall a bill.

Where the Bill Stands in October 2026

The Senate did not take up the House text directly. Two committees share jurisdiction over crypto markets, so the Senate built its own versions.

Dates and vote counts as reported by congressional trackers in October 2026. Check Congress.gov for the latest floor action.

The September vote was procedural. Senators were voting on whether to begin debate, not on the bill itself, so the substance has never been voted down. Analysts tracking the bill in mid-2026 pointed to three unresolved disputes:

1. Ethics language. Whether senior officials and their families should be barred from issuing or profiting from crypto assets while in office.
2. Stablecoin yield. Whether exchanges and other third parties should be allowed to pay rewards to people who hold stablecoins. The GENIUS Act bars issuers from paying interest, but it left room for rewards paid by others, and banks want that room closed.
3. DeFi developer liability. How far the protections for people who write and publish code should go, and whether they could shield bad actors.

Any version that reaches the President also has to be reconciled between the two Senate committees and then with the House. Realistically, the next window is the lame-duck session after the November 3 elections, and if that fails, a new Congress in 2027 would have to start again.

The practical takeaway: nothing in the CLARITY Act is law yet. Plan around the rules that exist today, and watch the lame-duck session.

SEC vs CFTC: Who Would Regulate What

The bill’s central move is to split oversight according to what an asset is and how it is sold.

For a merchant, the most visible effect would be on the services around you. The exchange you use to convert crypto to dollars would register with the CFTC and face federal rules on how it holds your funds. Today, many of those protections depend on state licenses that vary widely.

Digital Commodities, Investment Contracts and Mature Blockchains

The bill introduces a few definitions that are worth understanding, because they will appear in news coverage for years.

Digital commodity. A digital asset whose value is intrinsically linked to the use of a blockchain system. Bitcoin and Ether are the obvious examples, and they would fall under the CFTC’s spot-market authority.

Investment contract asset. A token sold as part of a fundraising arrangement. The fundraising itself stays under the SEC. The token can later trade as a digital commodity once the network meets the bill’s standards.

Mature blockchain system. A network that is no longer controlled by a single person or group. The bill sets out a certification process, so that a project can show the network has reached that point and its token can be treated as a commodity rather than a security.

This structure is meant to end the situation where a token’s status is decided years after launch through enforcement. Instead, there would be a defined path from fundraising to open trading.

Protection for Non-Custodial Developers and Tools

For businesses that use crypto payments, one section matters more than the rest. The House bill includes the core of the Blockchain Regulatory Certainty Act (BRCA), reported as Section 110 of H.R. 3633. It states that developers and blockchain service providers who do not have control over users’ funds are not money transmitters simply because they write code, run infrastructure or provide non-custodial software. Coverage of the Senate draft places the same protection in Section 604.

Why does that matter? Money-transmitter status is what triggers state licensing in nearly every US state, along with heavy compliance duties. A non-custodial wallet, or a gateway that routes a payment directly from your customer’s wallet to yours, never holds anyone’s money. The BRCA language would write that distinction into federal law instead of leaving it to guidance and interpretation.

Senator Ron Wyden has publicly urged Senate leaders to keep the provision. Some law-enforcement groups oppose it, which is part of the DeFi liability dispute described above. If you want a refresher on why custody is the dividing line, our explainer on custodial vs non-custodial gateways walks through how funds move in each model.

CLARITY Act vs GENIUS Act

The two bills are often mentioned together because they moved through the House on consecutive days, but they cover different ground.

In short, the GENIUS Act is already law and governs the dollar-backed stablecoins you are paid in, such as USDC. The CLARITY Act would govern almost everything else in the market: the venues where those coins and other tokens trade, the firms that hold them for customers, and the projects that issue new tokens. The two are designed to fit together, which is why the Senate drafts cross-reference the GENIUS Act rather than repeating it. You can read our separate GENIUS Act explainer for the stablecoin side, including the October 2026 rule from the Office of the Comptroller of the Currency.

What It Would Change for Businesses That Accept Crypto

Selling goods or services for crypto is not the activity the CLARITY Act is aimed at. A store that takes a USDT payment for a product is a merchant, not an exchange or a broker. Some states already say this explicitly: New York’s BitLicense rules exempt merchants and consumers who use virtual currency solely to buy or sell goods and services.

The changes you would feel are indirect:

• Safer off-ramps. Exchanges registered with the CFTC would have to segregate customer assets and meet federal conduct rules. That reduces the risk of losing funds in an exchange failure when you convert crypto to dollars.
• Fewer surprises about tokens. A clear commodity-versus-security framework makes it less likely that a coin you accept is suddenly delisted because of a legal dispute.
• Legal clarity for non-custodial tools. If the BRCA language survives, the software you use to receive payments directly would rest on firmer legal ground.
• More banks and processors willing to serve crypto businesses. Regulatory clarity tends to reduce “de-risking,” where banks close accounts simply because a business touches crypto.

What the bill would not do is just as important. It does not change how crypto payments are taxed. It does not require a merchant to register in order to accept crypto. It does not change the basic mechanics of a payment: your customer still sends funds from their wallet, and the transaction is still final once it is confirmed on the network.

If you accept crypto today, the best preparation is the same with or without the bill: keep clean records of every payment, convert through reputable platforms, and choose payment tools that never take custody of your funds.

What Happens Next

Three paths are realistic over the next several months.

1. Lame-duck passage. After the November 3 elections, leaders could try again with a compromise on ethics, yield and DeFi language. It needs 60 votes in the Senate and agreement with the House text.
2. A narrower bill. Pieces with broad support, such as the BRCA protections or exchange registration, could move separately or be attached to other legislation.
3. A restart in 2027. If nothing passes before the new Congress is sworn in, the process starts over, although the committee work done so far would shape the next attempt.

Signals worth watching before the end of 2026:

• a new cloture filing by Senate leadership after the elections
• a published compromise on stablecoin rewards, since that dispute pulls in the banking lobby
• whether the BRCA developer protections survive in the merged Senate text
• statements from the CFTC about funding and staff, since the agency would take on a much larger job

In parallel, regulators are not standing still. The SEC has been working on its own crypto rules, and the banking agencies are finishing the GENIUS Act regulations before the January 18, 2027 start date. For merchants, that means rules around stablecoins will become clearer in early 2027 regardless of what happens to the CLARITY Act.

The CLARITY Act is the most important piece of crypto legislation that has not yet become law. Its House version reflects years of negotiation, and its non-custodial protections speak directly to how modern crypto payments work. Its Senate path, however, is stuck on politics rather than mechanics.

For a business that accepts crypto, the sensible approach is to follow the bill without waiting for it. The stablecoins you accept will come under federal rules in January 2027 through the GENIUS Act. Your payment flow can already be built so that funds go straight to your own wallet, which is exactly the model the CLARITY Act’s developer protections are designed to recognize.