CLARITY Act Seeks to Clarify Cryptocurrency Regulation in US

The CLARITY Act aims to provide clarity on how cryptocurrencies are regulated in the US. The bill seeks to determine when a cryptocurrency token should be treated as an investment or a commodity, which would determine who regulates it and what rules platforms must follow.

Currently, there is no clear rule for when a token crosses from being a security to a commodity. The Securities and Exchange Commission oversees securities, while the Commodity Futures Trading Commission oversees futures markets and has narrower authority over direct commodity trading.

The CLARITY Act would expand the CFTC's authority to directly regulate platforms where Bitcoin is bought and sold. For tokens like Ethereum and XRP, which sit in a greyer zone between fundraising history and current decentralized use, the bill attempts to draw a line based on function rather than origin.