What to Expect From the CLARITY Act in 2026

Bill page. Source: congress.gov

Below are the main regulatory gaps in the U.S. crypto industry that the Clarity Act seeks to close.

Clear Legal Status for Cryptocurrencies

During the period when the U.S. Securities and Exchange Commission (SEC) was led by Chair Gary Gensler (April 17, 2021 – January 20, 2025), the crypto industry faced numerous enforcement actions from the regulator.

The SEC frequently identified many tokens as illegally issued securities. In its assessments, the regulator relied on the outdated Howey Test to evaluate digital assets. The crypto Clarity Act introduces new tools for determining the legal status of a crypto asset.

The four criteria of the Howey Test that allowed regulators to classify a cryptocurrency as an illegally issued security.

Clear Rules for Regulating Crypto Platforms and Projects

The Clarity Act provides clear answers regarding which regulator is responsible for which part of the crypto market. Previously, regulatory confusion arose because the SEC and the Commodity Futures Trading Commission (CFTC) were unable to clearly define their respective jurisdictions. The bill resolves this issue.

The legislation establishes a dual-track system:

This clear division of responsibilities simplifies regulation across the market.

Ban on Conflicts of Interest

Previously, exchanges and affiliated entities were allowed to trade freely on their own platforms for their own benefit. This regulatory gap created opportunities for market manipulation and insider trading. The bill closes this loophole.

Only limited exceptions related to client orders, risk management, and technical network operations are permitted, and regulators must be notified of such activity.

Unified Requirements for Crypto Brokers and Dealers

In the past, intermediaries in the crypto industry operated without a unified legal status or standardized requirements. This gap led to unequal conditions and increased risks for users.

The bill introduces mandatory registration for crypto brokers and dealers. It establishes requirements for capital, reporting, trade data storage, advertising, and conflict-of-interest management.

Protection of Customer Funds and Assets

With the emergence of cryptocurrencies, lawmakers faced the need to clearly define:

Unfortunately, the crypto industry has repeatedly seen scandals involving the misuse of customer funds by third parties. One notable example was the collapse of the FTX exchange.

The crypto infrastructure bill explicitly states that customer assets belong exclusively to customers. Platforms are prohibited from using them without explicit consent, commingling them with proprietary funds, or disposing of them at their discretion.

Clear Rules for Crypto Asset Custody

The legislation introduces the legal status of a qualified digital asset custodian. This provision is intended to address issues related to the secure storage of cryptocurrencies.

The document also defines minimum requirements for oversight, operational regulation, and asset protection.

Transparent Token Listing Requirements

Crypto exchanges have historically listed tokens in a chaotic manner. Many platforms fail to thoroughly vet crypto projects, resulting in an influx of questionable coins on the market.

The bill requires exchanges to publish basic information about the blockchain, token economics, transaction verification methods, as well as trading volume and volatility data. Users receive the minimum necessary information to assess risks.

Protection for DeFi Developers and Infrastructure

Previously, U.S. law did not explicitly state that technical participation in a blockchain network does not automatically make a person or company a financial intermediary. This created the risk that developers, node operators, or wallet providers could be required to register as exchanges or brokers.

The crypto market structure bill explicitly lists such activities and exempts them from regulatory requirements. These activities include:

Regulation applies only if such actors engage in fraud or manipulation.

Right to Self-Custody

The authors of the bill clarify that individuals may store digital assets independently, without intermediaries.

The legislation affirms the right to use personal wallets and conduct direct transfers for lawful purposes. Restrictions apply only in cases involving sanctions or when acting on behalf of others.

Ban on a Digital Dollar

Central bank digital currencies (CBDCs) have long been a subject of debate. While some countries, such as China and Russia, actively develop and deploy such assets, others oppose their introduction. The United States has chosen the latter approach.

The bill explicitly prohibits the Federal Reserve from developing, issuing, or distributing a retail digital dollar, either directly or through intermediaries. Lawmakers argue that a CBDC would make citizens’ financial activity fully transparent to the government. Banning a digital dollar is framed as a step toward protecting Americans’ privacy.

The United States on the global CBDC status tracking map. Source: atlanticcouncil.org

The Clarity Act was first introduced on May 29, 2025. It was presented in the U.S. Congress by House Financial Services Committee Chair J. French Hill. A second key author was Glenn “GT” Thompson, a U.S. Representative from Pennsylvania and Chair of the House Agriculture Committee.

Additional contributors include:

Some lawmakers, including Senator Cynthia Lummis, are actively involved in promoting the US clarity agenda around the bill.

Despite strong backing, the bill has faced criticism. Below are the main concerns and who could be negatively affected by its adoption in 2026.

1. Shifting the Crypto Market in Favor of Traditional Banks

The legislation limits the profitability of stablecoins and DeFi products—areas where crypto directly competes with bank deposits. Lost bank revenue is described as “systemic risk,” even though it represents standard market competition.

Compliance requirements such as transaction monitoring, registration, custodianship, and real-time compliance are modeled after banking infrastructure. These requirements are manageable for large corporations but nearly impossible for decentralized projects and small teams.

Charles Hoskinson, co-founder of Ethereum and creator of Cardano, has publicly supported this criticism. He argues that the bill serves the interests of banks and major financial institutions rather than fostering crypto innovation.

According to Hoskinson, the Clarity Act crypto framework and related initiatives create rules that benefit Wall Street incumbents while hindering decentralized projects and retail users.

https://www.youtube.com/watch?v=6bfYKc-HxUY&t=2340s

2. Driving DeFi Out of the U.S.

Market participants have called for the removal of all references to DeFi from the bill. Their concerns include:

Under these conditions, DeFi projects may be forced to shut down or relocate outside the United States. This outcome directly contradicts Trump’s goal of turning the U.S. into a global crypto hub.

3. Reducing Exchange Innovation and User Incentives

Proposals to ban stablecoin rewards for exchange users, promoted by banking interests, would directly impact both users and crypto companies.

For users, this means losing convenient yield-generating tools. For the crypto market, it would result in reduced liquidity and slower innovation.

One of the first major platforms to criticize the proposal was Coinbase, the largest U.S. exchange. On January 11, its team warned that it could withdraw support for the bill. Given Coinbase’s role in providing market monitoring tools to regulators, such opposition presents a serious challenge.

Following public backlash, media reports suggested that the provision may be revised.

On January 15, the issue escalated further when the Senate Banking Committee delayed the markup of the crypto market-structure bill after Coinbase withdrew its support for the latest draft. The exchange cited unresolved concerns, including restrictions on stablecoin rewards, prompting lawmakers to pause the process and reopen negotiations.

Key recent CLARITY Act changes that triggered industry pushback:

The SEC expects the bill to be sent to President Trump for signature in 2026, which keeps attention focused on when the Clarity Act will be signed.

The crypto market-structure bill is expected to advance in the Senate Agriculture Committee, where a markup is scheduled for January 27, 2026. However, even this approved date may change if the crypto industry, regulators, and the banking lobby fail to reach a compromise on key provisions by that time. The bill is also expected to be considered by the Senate Banking Committee, which has indicated plans to hold a markup later in January 2026, though no specific date has been announced. 

At the time of writing, there are no other confirmed or approved dates related to further legislative actions on the bill.

The Clarity Act is expected to be signed in 2026, so the way it is shaped now will directly affect the future of the U.S. crypto market. In its current form, the bill raises concerns for parts of the industry, especially around limits on stablecoin rewards and compliance rules that resemble traditional banking requirements and are hard for DeFi projects and smaller companies to follow. 

At the same time, lawmakers and regulators are clearly reacting to feedback from the crypto community. Recent delays and renewed negotiations show a willingness to listen and adjust the text. This leaves room for cautious optimism that, before the bill is signed in 2026, meaningful amendments can be introduced to balance the interests of crypto businesses, regulators, and the banking sector.