The U.S. Senate Banking Committee late on Monday made public the full text of a high-profile bill designed to bring statutory clarity to the regulation of cryptocurrencies. Titled the Clarity Act, the legislation would set out which federal agencies have jurisdiction over the sector and establish several detailed rules governing how market participants may operate. The committee intends to hold a vote to advance the bill on Thursday.
Supporters of the Clarity Act describe it as a framework that could reduce legal uncertainty for digital-asset firms and potentially encourage broader adoption of cryptocurrencies. The bill contains a number of provisions that touch on payments, market integrity, consumer protections and how traditional securities rules apply to crypto-based instruments. Below are the principal elements of the text.
Stablecoin rewards
One of the most debated components limits how exchanges and other crypto platforms can compensate users who hold dollar-pegged tokens known as stablecoins. Under the bill, rewards paid on idle stablecoin balances that closely resemble bank deposits would be prohibited. At the same time, the bill would permit rewards tied to transaction-based activity - for example, payments made using a stablecoin.
The legislation requires the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Department to issue joint rules implementing this restriction. That interagency rulemaking requirement is likely intended to produce coordinated guidance on how to distinguish between impermissible deposit-like activity and permitted transactional incentives.
The provision has drawn criticism from both sides of the debate. Banks have warned that the restriction could divert deposits away from the regulated banking system. Crypto firms and exchanges, by contrast, argue that barring third parties from paying interest on stablecoins would give incumbent banks an unfair competitive advantage.
Anti-money-laundering requirements
The Clarity Act would explicitly bring digital commodity exchanges, brokers and dealers under the Bank Secrecy Act by treating those platforms as financial institutions. That designation would subject these crypto market participants to anti-money-laundering obligations, customer identification rules and due-diligence requirements similar to those applied to banks.
Some crypto firms have previously contended they are not covered by the same anti-money-laundering regime as traditional financial institutions. This bill would largely fold them into the bank-like compliance framework, requiring reporting of suspicious activity and implementation of monitoring systems aligned with Bank Secrecy Act expectations.
SEC fundraising exemption
Another significant change in the bill would create a fundraising exemption for crypto companies. Under the proposed text, crypto firms could raise up to $50 million in a single year and up to $200 million in total without registering those offerings with the SEC in the same manner required of other issuers.
The exemption would allow tokens that are linked to investment contracts to be sold under a lighter regulatory burden than would typically apply to securities offerings. By carving out this pathway, the bill would narrow the SEC's ability to characterize most token sales as illegal securities offerings, a position the agency has taken in enforcement actions and which some courts have upheld.
Decentralized finance (DeFi)
The legislation also addresses platforms that describe themselves as decentralized. These platforms generally enable users to interact directly with one another rather than routing trades through an intermediary. Many such platforms have argued they cannot comply with bank-style rules because those rules assume a centralized legal entity that intermediates transactions and holds customer funds.
The Clarity Act would set statutory criteria for when a platform is sufficiently decentralized. If a platform fails to meet that threshold, it would be treated as a financial institution and become subject to reporting and monitoring obligations, including the need to report suspicious activity. The bill states that platforms would not qualify as decentralized if they retain the ability to block users or if they possess private permissions or hard-coded privileges that are not available to typical users.
Tokenization and securities treatment
Tokenization - the process of representing financial instruments such as stocks, bonds or real estate with crypto tokens - is directly addressed by the bill. The text makes clear that simply placing securities on a blockchain does not exempt those instruments from securities laws.
The bill tasks the SEC with further study of how tokenized securities should be regulated and requires that, for regulatory purposes, tokenized securities generally be treated the same way as the underlying securities they represent. The provision also notes crypto industry investment in tokenized stock trading as background to the legislative language, reflecting interest in experimentation with blockchain-based trading structures.
Next steps
The committee is scheduled to consider the bill in a vote later this week. If advanced out of committee, the measure would proceed to further congressional consideration. The Clarity Act lays out an array of federal rules affecting payments, compliance, fundraising and the treatment of digital representations of traditional securities, and it addresses long-standing debates about where crypto platforms fit within existing regulatory regimes.