The CLARITY Act: A Long Road to Regulatory Certainty
Congress has spent years arguing over who regulates crypto. The CLARITY Act might actually settle it.
The Digital Asset Market Clarity Act would draw a line between the SEC and CFTC. It would create registration rules for digital commodity exchanges. And it would replace years of enforcement-by-lawsuit with actual statutory language. That alone makes it the most significant crypto bill to reach this stage.
But "most significant" and "done" are not the same thing. The bill has cleared the House. The Senate is another story entirely.
The House vote
The CLARITY Act was introduced on May 29, 2025. Both the House Financial Services Committee and the House Agriculture Committee reported it in late June. The full House passed it on July 17, 2025 by a 294 to 134 margin.
Most opposing votes came from Democrats who cited investor-protection gaps. But the margin was wide enough to send a clear signal. Crypto market structure legislation had moved from wishful thinking to real policy.
Two Senate committees, one problem
The Senate split the bill across two committees. Banking handles SEC-related provisions. Agriculture handles CFTC oversight. That split created two tracks that have moved at very different speeds.
The Agriculture Committee advanced its version on January 29, 2026. No Democrats voted for it.
The Banking Committee stalled almost immediately. On January 12, it released a 278-page draft with a provision that banned digital asset platforms from offering passive yield on stablecoin balances. The banking lobby had pushed hard for that restriction. Their argument: unregulated stablecoin yields could trigger massive deposit flight from traditional banks.
Coinbase CEO Brian Armstrong pulled his support. The Banking Committee postponed its January 14 markup the same day it was scheduled.
The White House tried to broker a deal
Through February, the White House convened meetings between banking and crypto representatives. Patrick Witt of the Crypto Council ran sessions on February 2 and February 10. Neither produced a compromise.
The American Bankers Association kept pushing for a blanket ban on stablecoin interest. The White House set a March 1 deadline for both sides to find common ground. That deadline passed without an agreement.
Then on March 8, President Trump posted on Truth Social that he would not sign any legislation until the SAVE America Act cleared Congress. That pushed the CLARITY Act further back in the queue.
A breakthrough on stablecoin yield
The deadlock broke on March 20. Senators Thom Tillis and Angela Alsobrooks confirmed an agreement on stablecoin yield. The deal bans passive yield but allows activity-based rewards tied to transactions and platform usage. Senator Lummis described the talks as "99% resolved."
The reaction from industry was mixed. When crypto leaders reviewed the draft text on March 23, they found the language narrower than expected. It sat closer to the banking industry's original demands.
Brian Armstrong has not commented publicly on the new text. His January objections derailed the first markup attempt. His silence now is hard to read.
Where it stands today
On March 25, the House Financial Services Committee held its most significant tokenisation hearing yet. The focus was how the CLARITY Act would govern tokenised real-world assets.
Separately, the SEC and CFTC released a joint interpretive statement on March 17. It classified 16 crypto assets as digital commodities. That guidance is persuasive but not binding. Only legislation can make it permanent.
The Senate Banking Committee markup is now targeted for the second half of April. After that, the bill needs a 60-vote floor vote. Then reconciliation with the Agriculture Committee version. Then reconciliation again with the House-passed bill. Then a presidential signature.
Senator Bernie Moreno has warned that if the bill does not reach the Senate floor by May, digital asset legislation may not move again for years.
Polymarket puts the odds of enactment in 2026 at roughly 65%.
What this means for Bitcoin protocols
For protocols like Ducat that operate on Bitcoin L1, the CLARITY Act matters for two reasons.
First, it would formally classify Bitcoin as a digital commodity under CFTC jurisdiction. That removes the regulatory ambiguity that has hung over the entire ecosystem. For background on how the broader BTC DeFi space has developed under this uncertainty, see our overview of BTC DeFi in 2026.
Second, the stablecoin provisions could directly affect how BTC-backed stablecoins like UNIT are treated under federal law.
The activity-based rewards carve-out is particularly relevant. Ducat's liquidation mechanism, where users earn yield by recapitalising distressed vaults, would likely qualify as activity-based rather than passive. But until the final text is published, that reading is an interpretation, not a guarantee.
The calendar is tight. The compromise is untested. The industry's most influential CEO has yet to weigh in. Regulatory clarity is closer than it has ever been. But "closer" and "certain" are still very different things.
If you hold BTC and want to borrow against it without waiting for Congress, the tools already exist.
