CLARITY Act: A Mixed Bag for Bitcoin and the Crypto Industry

The CLARITY Act, part of the 'Crypto Week' legislative package in July 2025, aimed to provide regulatory clarity for digital assets. However, the bill underwent significant changes during its passage through Congress.

Initially, the House passed the bill, which included provisions that would have protected self-custody rights and granted immunity from money-transmitter liability to non-custodial wallet developers. Section 605, or the 'Keep Your Coins Act', prohibits federal regulators from restricting or impairing a person's ability to self-custody for any lawful purpose.

The bill also includes Section 604, which addresses blockchain regulatory certainty and prevents developers or providers from being classified as money-transmitting businesses solely based on their code. This provision is particularly relevant for open-source projects like Samourai Wallet and Tornado Cash, whose developers faced prosecution under the previous interpretation of the law.

Section 401, 'Permissibility of Digital Asset Activities', allows banks and institutions to treat Bitcoin as a real asset class, enabling them to custody digital assets, lend against them as collateral, operate nodes, provide brokerage and clearing services, and act as market makers or dealers. This provision has the potential to attract significant new capital into the market.

Despite its promise, some critics argue that the bill does not address key issues such as the commodity status of Bitcoin. The House-passed version would have locked in this status at the federal level, but this language was struck out during Senate rewriting. Additionally, the bill does not prohibit a central bank digital currency (CBDC), although the original version included a provision to ban it.