The bill, also known as H.R. 3633, cleared the House Financial Services Committee with a 32-19 vote and the House Agriculture Committee with a 47-6 vote, positioning it for consideration by the full House of Representatives.
The CLARITY Act introduces a new classification system to delineate these regulatory responsibilities. It defines a “digital commodity” as an asset intrinsically linked to a blockchain system and places these under the primary authority of the CFTC, which would oversee spot markets for such assets.
In contrast, the SEC would retain its jurisdiction over the offering of “investment contract assets,” which are digital commodities sold or transferred as part of an investment contract.
This approach focuses on the nature of the transaction during capital-raising phases, rather than classifying the underlying asset itself as a security in perpetuity. A central element of the bill is the concept of a “mature blockchain system,” defined as a network not “controlled by any person or group of persons under common control.”
The bill’s sponsor, Representative French Hill, framed the legislation as a way to provide consistency and move away from the “regulation by enforcement” approach that has characterized the U.S. crypto landscape.
Per his analysis, the definition of a “digital commodity” is overly narrow and would “likely cover only a handful of tokens,” leaving a large portion of the market in a continued state of regulatory uncertainty.
While acknowledging that the bill addresses important questions, Jennifer Schulp of the Cato Institute noted that it relies too heavily on grants of discretion to the agencies.
Concerns also exist that the bill’s definitions could create incentives for regulatory arbitrage, such as the creation of blockchains with minimal utility simply to meet the criteria for CFTC oversight.
