The CLARITY Act Explained: What It Changes for Exchanges, Tokens and Custody

If you run an exchange, issue a token or hold assets for customers in the US, the CLARITY Act is the bill that was supposed to tell you which regulator you answer to. Most explainers of the clarity act crypto bill were written while it still looked likely to pass, and several still describe it as if it were in force. It is not. This guide starts with where the bill stands as of 14 October 2026, then walks through what the text would change for exchanges, tokens and custody, how it fits with the GENIUS Act on stablecoins, and what is filling the gap while Congress is stuck.

Checked 14 October 2026 against the Senate and House roll call records, the House-passed bill text on GovInfo, the Congressional Research Service overview of H.R. 3633, and agency releases. Senate committee versions are described from law firm and research summaries where the substitute text itself could not be accessed; those points are labelled. This is an education guide, not legal advice.

What is the CLARITY Act?

The CLARITY Act is a US bill that would create a federal market structure for crypto: it defines which tokens are “digital commodities”, gives the CFTC authority over spot trading in them, keeps the SEC in charge of fundraising and securities, and sets registration and custody rules for the firms in between. Its formal name is the Digital Asset Market Clarity Act of 2025, and it was introduced in the House on 29 May 2025 by Rep. French Hill, chair of the House Financial Services Committee. The bill also carries the Anti-CBDC Surveillance State Act as Title VI, which would bar the Federal Reserve from issuing a central bank digital currency.

Two details trip up a lot of coverage. First, it is a House bill (H.R. 3633), not a Senate bill; Senators Tim Scott, Cynthia Lummis and John Boozman shaped the Senate versions, but they did not sponsor H.R. 3633. Second, it is a market-structure bill, not a stablecoin law. Stablecoins are governed by the separate GENIUS Act, which is already law.

Has the CLARITY Act passed? Status as of 14 October 2026

No. The House passed it, the Senate has not, and the President has not signed it. Here is the record:

Sources: Senate roll call vote 234 and House roll call 199 (both checked 14 October 2026); the bill’s action history; Troutman Pepper Locke (25 September 2026) for the 14 September text. Committee tallies are from secondary reports because the committee records could not be accessed.

What happened in the Senate vote?

The vote was procedural: whether to end debate on even taking the bill up. All 49 yes votes came from Republicans. The 50 no votes were 44 Democrats, two independents (Angus King and Bernie Sanders) and four Republicans (Susan Collins, Josh Hawley, Jerry Moran and Thom Tillis). Chris Coons did not vote. Some summaries, including one Google AI Overview seen on 14 October 2026, give the tally the wrong way round as “50-49”; the Senate record shows 49 yeas and 50 nays.

Why was the CLARITY Act stalled?

According to Paul Hastings’ policy tracker, the Democrats and independents who voted no cited “ethics, conflicts of interest, consumer protection and national security”. The ethics fight was about crypto holdings and token businesses of senior federal officials, including the President; the September text added divestment rules that Crypto Briefing reported would apply to officials holding $15,000 or more in token-issuing businesses. Stablecoin rewards were the other long-running dispute (see the stablecoin section below). The bill had already slipped once in January 2026, when Coinbase withdrew support the day before a planned Banking Committee vote, as Cointribune reported on 15 January 2026.

Is the CLARITY Act going to pass?

Nobody can say, and you should not plan around a date. What is confirmed: Sen. Tillis’s motion to reconsider preserves a path back to the floor, and Paul Hastings quotes him saying “This is not the end for the Clarity Act.” On 12 October 2026 Rep. French Hill said he hopes it can pass in the “lame duck session of Congress” after the November midterms, adding that agency rules “fall short of what we have to do, which is have a legislative solution” (Benzinga, via Yahoo Finance).

Troutman Pepper Locke’s 25 September 2026 assessment is that the bill is “effectively dead for the remainder of this Congress”. A bill that has not passed both chambers when a two-year Congress ends has to be reintroduced and start again, so the realistic windows are the lame-duck session or a new bill in 2027.

What would the CLARITY Act change? The SEC and CFTC split

The short version, from the Congressional Research Service’s overview of H.R. 3633: the CFTC would get “a central role” over digital commodities and their intermediaries, including exclusive jurisdiction over spot transactions on registered platforms, while the SEC would keep authority over primary sales of crypto, meaning fundraising, subject to an exemption. Everything below describes the House-passed text unless it says Senate.

What would it change for tokens?

Digital commodity vs investment contract

Section 103 defines a digital commodity as “a digital asset that is intrinsically linked to a blockchain system, and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system.” Eight things are excluded, including securities, security and commodity derivatives, permitted payment stablecoins, bank deposits and “goods, collectibles and other non-commodity assets” such as art and loyalty points.

The bill then separates the token from the deal it was sold in. A project may still sell tokens to investors under an investment contract, which is a security. But the bill says the token itself, an “investment contract asset”, is not the investment contract. CRS reads this as meaning the instrument is issued through an investment contract without itself becoming a security.

Section 203 adds that later secondary-market trades in the token are not securities transactions. For a token team, this is the core change: today the SEC can argue that a token stays a security for as long as buyers rely on the team; under the bill, the fundraising would be regulated, and the token would trade as a commodity.

The “mature blockchain” test

A mature blockchain system is one “not controlled by any person or group of persons under common control” (section 101). The bill’s new Securities Exchange Act section 42 lists seven criteria: system value, a functional system, an open and interoperable system, a programmatic system, system governance, an impartial system and distributed ownership. Two of them set a 20 percent line: no issuer or affiliated group may beneficially own 20 percent or more of the token’s units, or control 20 percent or more of voting power.

The process works by certification, not approval:

1. The issuer, an affiliate, a decentralized governance system or a registered digital commodity exchange files a maturity certification with the SEC.
2. The SEC may rebut it within 60 days of receipt; otherwise it takes effect after 60 days.
3. The SEC can stay a certification for up to 120 more days.
4. After a rebuttal, the filer must wait 90 days to recertify, or appeal to the D.C. Circuit within 60 days, which reviews the decision de novo.

Maturity matters because it decides how much ongoing disclosure an issuer owes and, under CRS’s reading, whether a CFTC-registered exchange may list the token at all.

Raising money: the new exemption

New Securities Act section 4(a)(8) would let a digital commodity issuer sell investment contracts involving its token without full SEC registration, if total proceeds over the prior 12 months are “not more than $50,000,000” (adjusted annually for inflation) and no purchaser ends up owning more than 10 percent of the outstanding units. Issuers must file disclosures under a new section 4B, including a plan of development, ownership and risk factors, with ongoing reporting until the blockchain is mature. Some summaries give a $75 million cap; the House-passed text on GovInfo says $50 million, so check which version a source describes.

How does the CLARITY Act affect XRP, ETH or SOL?

The bill names no tokens. Whether any given token would be a digital commodity depends on the definitions and the maturity test above, applied by the SEC and the courts. Separately, CoinCodex reports that on 17 March 2026 the SEC and CFTC jointly listed 16 assets, including bitcoin, ether, Solana and XRP, as digital commodities. That is an agency interpretation, not a statute, and a future commission can revise it. None of this says anything about price.

What would it change for exchanges, brokers and dealers?

• CFTC registration. Section 106 says no one may “act as a digital commodity broker, digital commodity dealer, or digital commodity exchange” without registering with the CFTC under new Commodity Exchange Act sections 4u and 5i.
• A bridge to registration. The CFTC would have 180 days to set up expedited registration, and firms that file would get provisional status lasting until 270 days after the final rules take effect. CRS notes that provisional registrants must protect customer assets and open their books to the CFTC.
• Listing rules. Per CRS, an exchange could list only digital commodities whose blockchains are certified mature or whose issuers meet ongoing reporting, and must publish information such as source code, transaction history and “digital commodity economics” first.
• No trading against customers. CRS says exchanges and their affiliates could not trade for their own account, subject to CFTC exceptions, and core principles would cover trade monitoring, recordkeeping, conflicts of interest and antitrust.
• Dual-registered firms. SEC-registered broker-dealers and alternative trading systems could trade digital commodities that meet listing standards after notifying the CFTC, without a second registration.
• AML. The Bank Secrecy Act would apply to the new exchange, broker and dealer categories.

If you are building an exchange for US users, the practical point is that none of these categories exist yet. For what a platform involves before any of this, see the white label exchange guide.

What would it change for custody?

• Segregation. Exchanges could not commingle their own assets with customer assets, though CRS notes customers could waive this in some cases, and bankruptcy law would be updated so segregated customer property is protected.
• Qualified custodians. Section 405 would create “qualified digital asset custodians”, which can include banks, overseen by state or federal regulators depending on type; section 402 would require futures commission merchants to use them.
• Bank custody. Section 310 addresses custody by banks.
• Proof of control (Senate). The Senate version added a requirement, not in the House text, that exchanges show they can access and move customer funds using private keys, according to Benzinga’s 12 October 2026 report of Sen. Lummis’s comments.
• Self-custody. Section 105(c)(1) says “A United States individual shall retain the right to” keep their own assets in a hardware or software wallet and to transact peer to peer. If you hold your own keys, the bill would not change how you do it; the seed phrase guide covers how that works.

DeFi and developer carve-outs

Sections 309 and 409 exclude “decentralized finance activities” from the bill’s registration requirements. CRS gives validating as an example, and stresses that both agencies keep their anti-fraud and anti-manipulation powers. Section 109 protects non-controlling blockchain developers, meaning people who write or publish code without controlling users’ funds.

The Senate texts moved this line. Galaxy Research’s reading of the May 2026 Banking text is that it excluded validators, sequencers, oracle providers, node operators and security councils from the definition of a regulated trading protocol, and kept the developer protections, while preserving criminal liability for money transmission where a developer acts with specific intent. Crypto Briefing reported that the September 2026 text would require “decentralized and semi-decentralized trading platforms” to register with the CFTC. Where a protocol sits on that line is the question any DeFi team would need answered first. The DeFi explainer covers how these protocols work.

How the CLARITY Act fits with the GENIUS Act

The GENIUS Act (S. 1582) is already law: it was approved on 18 July 2025 as Public Law 119-27. It decides who may issue a payment stablecoin and on what reserve, redemption and disclosure terms. The CLARITY Act builds around it rather than replacing it:

• A permitted payment stablecoin is excluded from the “digital commodity” definition (section 103), and the bill borrows the GENIUS Act’s definitions.
• Per CRS, SEC and CFTC jurisdiction over payment stablecoins would be limited to transactions involving registered entities.
• The Senate added the hardest fight: rewards. Galaxy Research reports the May 2026 Banking text retitled section 404 “Prohibiting Interest and Yield on Payment Stablecoins”, added Treasury as a rulemaker and set a $5 million per-violation penalty. CoinCodex summarises the end result as no yield for simply holding a stablecoin while activity-based rewards stay allowed, and Crypto Briefing reported a Treasury “circuit breaker” to regulate issuer rewards programmes that threaten community bank deposits.

So if the CLARITY Act fails for good, stablecoin issuance rules do not change: the GENIUS Act still takes effect by 18 January 2027. What would be lost is the Senate’s extra limit on rewards paid by platforms. The stablecoin regulation guide has the GENIUS Act rule-by-rule status.

What happens if the CLARITY Act doesn’t pass?

Crypto stays regulated, just by agencies rather than statute. Since the vote:

• SEC: on 18 August 2026 it proposed “Regulation Crypto Assets”, with fundraising exemptions and a conditional safe harbour; Troutman Pepper Locke gives the comment deadline as 20 October 2026. SEC Chairman Paul Atkins said: “With or without legislation, we will act decisively within the SEC’s statutory authority.”
• CFTC: on 5 October 2026 it published an advance notice of proposed rulemaking (release 9307-26) on regulating retail leveraged crypto transactions and a “crypto asset market” category of exchange. Troutman does not expect a binding CFTC rule before late 2027.

The catch for your business: agency rules can be rewritten by the next commission, and they cannot do what only Congress can, such as giving the CFTC authority over spot markets, changing bankruptcy priority for customer property, or settling tax treatment. The October 2026 regulation roundup tracks both agencies month by month.

What are the new laws on crypto in the US?

As of 14 October 2026, the GENIUS Act is the one federal crypto statute passed in this Congress. The CLARITY Act is a bill. Everything else is agency guidance, interpretations and proposed rules, plus state licensing. If a page tells you the CLARITY Act “changes” how your exchange or token is regulated today, it is describing a proposal.

What this means for you

• Exchanges and brokers: there is no CFTC registration to apply for yet. Keep state licences and AML programmes current, and build customer-asset segregation and key-control evidence now, since every version of the bill and most agency proposals point that way.
• Token issuers: plan fundraising under current SEC rules and the August 2026 proposal, not the bill’s $50 million exemption. Track insider ownership against the 20 percent line if you expect a maturity test of some kind.
• Custodians: the qualified custodian model in the bill tracks what banks and trust companies already offer; nothing changes until a statute or rule says so.
• DeFi teams: the carve-out is narrower in the Senate text than the House text. Get advice on which side of “semi-decentralized” you sit.
• Everyone: recheck the status before the lame-duck session after the November 2026 midterms.

For compliance providers that help with licensing and AML, see the KYC/AML & Compliance section, and for how this site sources and dates its facts, the methodology.