CLARITY Act Aims to Clarify Cryptocurrency Regulation in the US

The CLARITY Act aims to clarify the regulatory framework for cryptocurrencies in the US, particularly for tokens that are used for fundraising and later become decentralized.

Currently, there is no clear rule for when a token crosses from being a security to a commodity, with two regulators involved: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

The CLARITY Act would expand the CFTC's authority over Bitcoin, which is already considered a commodity, allowing for broader regulation of platforms where it's bought and sold.

Tokens like Ethereum and XRP, which sit in a greyer zone between fundraising history and current decentralized use, would be treated based on function rather than origin under the new framework. Fundraising activity would remain under SEC oversight, while later-stage trading could shift to the CFTC's framework.