CLARITY Act Draft Would Set Federal Crypto Framework

Why It Matters

A Senate bill would establish a federal regulatory framework for cryptocurrency and digital-asset activities and industry participants, according to a new report by the Congressional Research Service. The proposal assigns the Commodity Futures Trading Commission a central role for digital commodities while retaining a defined Securities and Exchange Commission role for certain primary-market sales. That division would place cash and spot-market sales of digital commodities under the CFTC’s exclusive jurisdiction, while requiring exchanges, brokers, and dealers in those markets to register with the agency. For the public, the text would establish customer-asset protections by requiring those assets to remain the customer’s property and generally barring their commingling with intermediary funds.

The text also would bar the president, vice president, Members of Congress, and other covered officials from issuing or sponsoring a digital asset in exchange for consideration.

The Big Picture

The measure combines and modifies language from H.R. 3633, Senate Banking Committee amendments reported June 1, and S. 3755 as reported by the Senate Agriculture Committee Feb. 2.

An originator could raise no more than $200 million under the exemption and would have to file disclosures with the SEC, while a digital asset service provider could fulfill the disclosure requirement in certain circumstances. The disclosure requirement would no longer apply if an issuer certified that, during the preceding 180 days, it engaged in no more than a nominal level of entrepreneurial or managerial efforts and that those efforts were not a primary factor in determining the asset’s value; the certification would be deemed effective if the SEC failed to issue a notice of objection within 90 days.