Digital assets have long existed in regulatory uncertainty, but right now the U.S. is making another big move toward defining how digital assets are governed.
For a quick refresher, the GENIUS Act made history in the summer of 2025 as the first crypto-focused federal legislation ever signed into American law.¹ In a time of strong divisions on Capitol Hill, eighteen Senate Democrats crossed the aisle to pass it,² giving the bill rare bipartisan momentum. It zeroed in on stablecoin issuance, laying out clear definitions for issuers, like reserve requirements, prudential standards, and payment rails.³
In fact, the GENIUS Act was the first part of the legislation originally proposed after the 119th Congress was sworn in. An early omnibus bill was broken into 3 parts: GENIUS, CLARITY, and what was at the time called an Anti-CBDC Bill. The CLARITY Act was built to finally answer the questions of market structure for digital assets in the United States.
However, in the months that followed, analysts and lawmakers alike have noted that the bill has evolved into what Galaxy Research described as a “Christmas tree bill,”⁴ weighed down by secondary provisions on stablecoin yield and DeFi liability. Paradoxically, the original market structure questions have become the least controversial element of the bill, even as these extra ornaments threaten to stall its progress on the Senate floor.
With some calling it the most difficult piece of legislation they have ever worked on, the Senate Banking Committee advanced the Act in a 15-9 vote, seeing two Democrats cross the aisle.⁵ It was clean but not damage free, with the bill now heading to the full Senate floor.
What is the CLARITY Act and how does it differ from the GENIUS Act
It’s been said that at least nine U.S. federal agencies could claim some authority over crypto,⁶ with the SEC and the CFTC leading a drawn-out turf war over who regulates what. Under Gary Gensler, the SEC generally argued that most digital tokens aside from Bitcoin fell within the definition of securities.⁷ The industry has paid for the confusion in overlapping rules, with enforcement actions that have left developers imprisoned and exchanges guessing.
The CLARITY Act attempts to draw a clearer line between digital commodities and securities. Digital assets whose value is tied to the use of a blockchain get classified as digital commodities, sitting under CFTC authority. Assets connected to capital raises with an expectation of profit stay with the SEC, with a new limited exemption that makes registration less of a burden.
| Dimension | Signed July 2025 GENIUS Act |
Committee May 2026 CLARITY Act |
|---|---|---|
| Focus | Stablecoin issuance | Broader digital asset market structure |
| Primary regulator | Federal Reserve + state regulators | SEC and CFTC, divided by asset type |
| Key ruling | Payment stablecoins are not securities | Tokens classified as commodities or securities |
| Senate vote | 18 Democrats in favor | 15-9 committee, 2 Democrats crossing |
| DeFi protections | Not addressed | Included |
What Is in the CLARITY Act: SEC Authority, CFTC Jurisdiction, and Section 301
At its core, the CLARITY Act is about updating market structure: the CFTC gets exclusive authority over spot and cash market transactions in digital commodities. Exchanges, brokers, and dealers working in this space would need to register with the CFTC and meet core principles around trade monitoring, recordkeeping, conflict of interest, and keeping customer assets separate from exchange assets. As more and more lawmakers and industry advocates have gotten involved, additional provisions have been added, modified, or removed.
Notably, the Blockchain Regulatory Certainty Act (BRCA’s) developer protections were effectively removed from Section 301 as part of the compromise that secured committee passage,⁸ a concession that DeFi advocates warn could leave software developers without clear legal cover as the bill advances.
Perhaps the most controversial addition to the bill is over stablecoin yield. The GENIUS Act focused mostly on stablecoin issuance, while trading and earning was left unaddressed. This bill retains guardrails on yield-bearing stablecoin products that look too much like bank deposits, reflecting a fight that’s been ongoing between crypto firms and the banking sector. Custodial arrangements are also formalized, with a qualified digital asset custodian framework that may include banks and falls under state or federal oversight.
What happens next: Senate floor vote, 60-vote threshold, and the road to law
The Act has not passed yet, and it still faces obstacles requiring 60 votes on the Senate floor, which will take support from at least seven Democrats.⁹
Chairman Tim Scott said the bill means “closing the doors that criminals, terrorists and hostile regimes have tried to exploit,” and that it “strengthens anti-money laundering and sanctions rules and gives law enforcement better tools.”¹⁰ While Elizabeth Warren commented that the committee was spending time on “a bill written by the crypto industry for the crypto industry,” she arrived with over 40 amendments on money laundering and consumer protections, none of which passed.¹¹
Crypto industry reaction landed on the positive side. On X, Brian Armstrong called it “a big improvement from where we were in January on rewards, tokenization, DeFi, and CFTC authority.”¹² Circle’s Jeremy Allaire posted that the firm was thrilled with the progress of the Senate Banking Committee toward enacting what he called a critical law that will help transform the global financial system.¹³
Why Canadian crypto firms are watching the CLARITY Act
Canada doesn’t get a vote on the CLARITY Act, but it will live with the outcome. U.S. regulatory standards have a way of becoming the default standard, and firms that want access to American platforms and American capital tend to build toward whatever framework Washington sets.
Three possible implications stand out for Canada:
- U.S. classification rules for digital commodities might affect how Canadian firms structure cross-border access to U.S. platforms
- Canadian dealers offering DeFi-linked products could face new questions about whether existing CIRO registration is sufficient
- Custody standards formalized under the CLARITY Act may set a de facto benchmark that institutional clients use to evaluate Canadian custodians
Subscribe to the Canadian Web3 Council newsletter for ongoing coverage of the CLARITY Act Senate floor vote, the Banking and Agriculture Committee text reconciliation, and what finalized U.S. digital asset rules mean for Canadian firms.
The CLARITY Act isn’t Canada’s legislation, but its effects will be. Canadian firms that wait for U.S. rules to finalize before adjusting their compliance posture could find themselves playing catch-up.
This commentary is published for informational purposes only.
1. EisnerAmper. (August 2025). GENIUS Act Signed into Law; More Legislation Pending.
https://www.eisneramper.com/insights/cryptocurrency-insights/genius-act-signed-into-law-0825/
2. ABC News. (June 18, 2025). What to know about the GENIUS Act, a crypto regulation bill.
https://abcnews.com/Business/genius-act-crypto-regulation-bill/story?id=121981442
3. Arnold & Porter. (July 2025). What You Need To Know About the New Stablecoin Legislation.
https://www.arnoldporter.com/en/perspectives/advisories/2025/07/new-stablecoin-legislation-analyzing-the-genius-act
4. Galaxy Research / Alex Thorn. (January 9, 2026). Weekly Top Stories: Market Structure Bill Set for Committee Vote.
https://www.galaxy.com/insights/research/weekly-top-stories-01-09-26
5. CNBC. (May 14, 2026). Crypto industry scores win as Clarity Act regulation bill clears Senate hurdle.
https://www.cnbc.com/2026/05/14/clarity-act-congress-crypto-senate.html
6. American Action Forum. (November 2022). Who Regulates Crypto?
https://www.americanactionforum.org/insight/who-regulates-crypto/
7. DLA Piper. (September 2022). SEC Chair Gensler continues to push broad SEC authority over digital assets.
https://www.dlapiper.com/insights/publications/2022/09/sec-chair-gensler-continues-to-push-broad-sec-authority-over-digital-assets
8. Crypto Times. (May 15, 2026). Behind Closed Doors, Lawmakers Cut Developer Safeguards from Crypto Bill.
https://www.cryptotimes.io/2026/05/15/behind-closed-doors-lawmakers-cut-developer-safeguards-from-crypto-bill/
9. CoinGeek. (May 14, 2026). US Senate’s digital asset market rules nearing the finish line.
https://coingeek.com/us-senate-digital-asset-market-rules-nearing-the-finish-line/
10. CoinDesk Liveblog. (May 14, 2026). Senate Banking Committee advances Clarity Act to full Senate floor.
https://www.coindesk.com/policy/2026/05/14/live-senate-banking-committee-holds-key-hearing-to-advance-clarity-act
11. Bitcoin Magazine. (May 14, 2026). Senate Banking Committee Opens Historic Crypto Bill Markup As Warren, Republicans Clash Over CLARITY Act Amendments.
https://bitcoinmagazine.com/news/senate-banking-committee-crypto-bill
12. Brian Armstrong on X. (May 14, 2026).
https://x.com/brian_armstrong/status/2054992403757666518?s=20
13. Jeremy Allaire on X. (May 14, 2026).
https://x.com/jerallaire/status/2054972290769772697?s=20
