Senate's CLARITY Act Aims to Draw Clearer Line Between Crypto Securities and Commodities

The Senate's CLARITY Act aims to bring clarity to the regulation of cryptocurrencies. The bill, which has been merged and now stands at 616 pages with 104 sections, includes a new ethics division that would be enforced by the Department of Justice and sunsets on January 20, 2029.

The ethics provision is a compromise between Democrats and Republicans, who highlighted President Donald J. Trump's $1.4 billion in crypto-related income during 2025 as a reason to include stricter regulations. The ethics division would prohibit certain officials with direct policy or enforcement authority over the sector from having conflicts of interest.

The CLARITY Act also aims to draw a clearer line between digital asset securities and commodities, setting out who supervises spot markets and laying out registration and disclosure norms that are more workable for token issuers and intermediaries. The bill has been sent to the Senate floor, but its passage is uncertain.

If passed, the CLARITY Act would give agencies one year from enactment to implement the ethics constraints. It would also provide clearer routes to federal licensure for exchanges and brokers, potentially consolidating liquidity in venues that meet national standards.