The CLARITY Act

What the bill does

The CLARITY Act is the piece of United States legislation the digital asset industry has spent two years waiting on, because it would finally settle which regulator governs which token. Its full name is the Digital Asset Market CLARITY Act, and its central move is to sort tokens into three buckets. Digital commodities, the category that covers Bitcoin and Ether, would fall under the Commodity Futures Trading Commission. Tokens sold to raise money for a project would fall under the Securities and Exchange Commission. Payment stablecoins would sit with the banking regulators.

Those distinctions sound technical, but they decide practical questions with real weight. Whether a regulated bank can custody a given asset depends on how that asset is classified, as does which disclosure regime a token issuer must follow and which agency can bring an enforcement action. A token treated as a security carries one set of obligations around registration and disclosure; the same token treated as a commodity carries a different, lighter set, so the classification changes the economics of issuing and listing it. By codifying the boundaries in statute rather than leaving them to case-by-case rulings, the CLARITY Act would replace years of uncertainty with a fixed map, and that is why so much of the market is watching a single bill.

Where it stands

The bill has moved, though slowly. The House of Representatives passed its version in July 2025. The Senate Banking Committee advanced its own version on 14 May 2026. Momentum then stalled, first over stablecoin yield: the rules governing whether stablecoins may pay interest to the people who hold them. By late July the live blocker had shifted to an ethics provision, a ban on federal officials issuing digital assets with the Justice Department as its sole enforcer, which Democrats object to; a revised draft on 23 July sunsets that provision in 2029, with the yield dispute and committee reconciliation still queued behind it. For the bill to become law, both chambers have to pass matching text and the President has to sign it, so the House vote in 2025 was only the first of several gates, and the Senate remains the harder one to clear.

The stablecoin yield snag

That the CLARITY Act keeps snagging on stablecoin yield reflects how far the question reaches. Whether a stablecoin can pay a return touches directly on where deposits sit in the financial system, which pulls banks and their regulators into what might look like a narrow crypto provision. It has proved the hardest point to agree, and until it is resolved the broader bill cannot advance.

The odds of passage

The odds of passage this year have slipped as the calendar has tightened. Galaxy Research cut its 2026 passage estimate to 60% from 75% on 5 June, then cut again to 50% in July as the calendar tightened. On the prediction market Polymarket, contracts on passage touched a record low of 31% earlier in July and have since traded roughly between 37% and 47%. Stifel’s Brian Gardner has argued that the bill needs to clear the Senate by the end of July, and that without it the prospects for the year deteriorate materially. With the recess approaching, that deadline gives the current session its urgency.

What to watch

Where this leaves the market is in a familiar holding pattern. Passage would give the United States its first comprehensive rulebook for digital assets, telling banks, issuers and exchanges which regulator to answer to and on what terms. Failure would leave the boundaries to be drawn by enforcement actions and the courts, one case at a time, which is the very uncertainty the CLARITY Act was written to end. The thing to watch is this week’s floor window: the Treasury Secretary called the bill “at the one-yard line” on 21 July, a vote has been pencilled in, seven Democratic votes are still needed, and 7 August is the hard deadline before recess. The numbers on offer suggest the outcome is genuinely open, and the clearest signal will be whether the bill moves before members leave Washington. Our explainer on stablecoins and the GENIUS Act covers the yield dispute holding it up.