On May 14, the U.S. Senate Banking Committee passed the CLARITY Act with bipartisan support. The act clarifies the division of responsibilities between the SEC and CFTC in the crypto space, providing a legitimate path for issuing and operating on blockchain networks.

Written by: @milesjennings

Translated by: Jiahua, ChainCatcher

The Senate Banking Committee has just voted to advance crypto "market structure" legislation (i.e., legislation concerning market division, regulatory responsibilities, and trading rules) with bipartisan cooperation, marking a historic moment for the crypto industry.

Why is this happening? Because the Digital Asset Market CLARITY Act will ultimately establish clear rules for blockchain networks and digital assets.

For the past decade, the lack of clear regulation in the U.S. has distorted the market, stifled innovation, and exposed consumers to significant risks. CLARITY will put an end to this situation.

The 1933 Securities Act established an investor protection mechanism that supported a century of capital formation and innovation in the U.S. The significance of CLARITY is similar — it represents a once-in-a-lifetime shift in the U.S. financial regulatory landscape that will bring enormous opportunities.

With its recent passage in the Senate, this foundational legislation crucial to the entire crypto industry is closer to becoming law than ever before.

Whether they are founders of startups, consumers, or large traditional financial institutions and investors migrating to the blockchain, all will benefit from this.

Next, the bills from the two committees of Congress will be merged into a single comprehensive bill for a vote by the full Senate. Once approved, it will be sent to the House of Representatives for review, and if successful, it will be sent to the White House for the president’s signature.

Why the U.S. Needs CLARITY Now

For the past decade, the crypto industry has been continuously expanding, but the U.S. has always lacked a complete regulatory framework. Regulators have had to piece together existing regulations to manage the industry, and this approach has been a complete failure.

This has not only resulted in confusion over legal interpretations and inconsistent standards but has also led to serious government overreach and abuse of power.

This regulatory uncertainty has not only hindered innovation but also provided fertile ground for bad actors. Those with malicious intent in the highly scrutinized negative news in the crypto space over the past decade have easily launched products that exploit regulatory loopholes, taking advantage of consumers.

Meanwhile, responsible builders have had to face dubious "law enforcement as legislation."

This uncertainty has pushed crypto development overseas. When the U.S. fails to offer space for innovation, entrepreneurs look for other jurisdictions, including those that have already implemented more refined regulatory regimes.

The EU's Markets in Crypto-Assets Regulation (MiCA) and the UK's crypto regulations are two examples of the U.S. falling behind.

Fortunately for U.S. innovation, no other jurisdiction has yet implemented successful regulatory models. But tailored regulatory frameworks will eventually attract and concentrate entrepreneurial activities in those regions, along with the economic value and job opportunities they create.

Imagine if Amazon, Apple, Facebook, Google, Microsoft, Netflix, NVIDIA, and Salesforce had all been founded outside of the U.S.; what would the U.S. economy look like?

Therefore, if the U.S. can provide builders with regulatory clarity, domestic innovation will greatly benefit. The GENIUS Act (the "Guiding and Establishing U.S. Stablecoin National Innovation Act") passed in July 2025 is a typical case in point.

GENIUS established a regulatory framework for stablecoins (digital assets pegged to fiat currency, usually anchored to the dollar), giving rise to a brand new model: open monetary infrastructure.

After this bill passed, it brought about unprecedented growth and adoption, benefiting the U.S. economy and supporting the long-term dominance of the dollar.

When the legal framework is designed to promote innovation and protect consumers, the U.S. can lead the way, and the world will benefit as a result.

Those entrepreneurs and early users who believe in the promise of crypto should have a clear regulatory framework to realize their vision, regardless of outside opinions.

They also need a framework that recognizes the potential of blockchain networks to drive a significant and novel transformation of the technological platform. This transformation should go beyond the speculative applications born from poor policy, allowing people to build beyond the initial financial scenarios that current U.S. regulations cover.

CLARITY is tailored to establish such a clear framework.

How We Got Here

The content of the CLARITY Act is not entirely new. Many of its concepts and principles originate from existing commodity and securities laws. This act has also evolved from previous rounds of legislative iterations, including two House-originated "market structure" bills:

The 2024 "21st Century Financial Innovation and Technology Act," called "FIT21" (HR 4763); the 2025 "Digital Asset Market CLARITY Act" (HR 3633).

Similar to the current Senate bill, both FIT21 and the House version of CLARITY attempted to give blockchain networks a pathway to:

• Securely and effectively launch blockchain networks and digital assets in the U.S.;
• Clarify the regulatory division between the SEC and CFTC in the crypto space, delineating whether a digital asset is a security or a commodity;
• Ensure oversight of crypto exchanges;
• Further protect U.S. consumers through regulatory constraints on crypto transactions.

Two years ago, FIT21 passed with overwhelming bipartisan support (279 votes for and 136 against, including support from 71 Democrats).

The House version of CLARITY passed in July 2025 with even higher bipartisan support (294 votes for and 134 against, including support from 78 Democrats).

These bills together sent a strong signal to the Senate: accelerate crypto market structure legislation.

The Senate version of CLARITY built on the bipartisan momentum from the House and improved on several key points compared to previous bills (details below). This bill has been advancing in the Senate for several years, with the past year being the fastest-paced phase:

• In June 2022, Senators Lummis and Gillibrand introduced the "Lummis-Gillibrand Responsible Financial Innovation Act," the first bipartisan legislative proposal aimed at establishing a comprehensive regulatory framework for the crypto industry.
• In July 2025, the Senate Banking Committee (the committee overseeing the SEC) released a bill discussion draft within its jurisdiction, merging and unifying the two approaches of the Lummis-Gillibrand Act and the House version of CLARITY.
• Information was published for consultation, soliciting feedback and legislative solutions, hoping to find a balance between innovation and financial stability, and consumer protection.
• In September 2025, based on the feedback received, the Senate Banking Committee released a second discussion draft.
• In January 2026, the Senate Banking Committee released another iterative version reflecting the results of months of bipartisan negotiations.
• Also in January 2026, the Senate Agriculture Committee published and advanced its market structure legislative draft within its jurisdiction.
• Today (May 14, 2026), the Senate Banking Committee just advanced the portion of the CLARITY Act that it is responsible for in an "executive" meeting.

Why CLARITY Is Important: Networks Are Not Companies

For over a century, forming companies has been a primary driver of innovation in the U.S. This pathway is well-established: entrepreneurs raise capital to start businesses, and upon success, profits are returned to shareholders.

U.S. laws have finely honed this model, defining responsibilities, emphasizing transparency, and aligning incentives to manage trust in founders and operators.

This framework is suitable for building companies. But it is not suitable for building networks.

The existing legal framework presupposes centralized control by a manager, requiring that such control exists long-term. However, networks do not have a controlling party. Networks rely on shared rules to coordinate people, capital, and resources, rather than centralized ownership.

Imposing a company framework on a network distorts it into a corporate form. Control becomes concentrated again, intermediaries re-emerge, and those dependent on the system are exploited for value.

Across the digital economy, this dynamic has given rise to a class of company-like networks with immense concentrated power — payment systems, e-commerce marketplaces, social platforms, app stores — that capture a disproportionate share of the value created by participants.

A ride-hailing user pays $100 for a ride, but the driver only receives a small portion. A song created by a musician gets listened to by millions, yet in every dollar of income, they only receive a few cents.

Wherever company-like networks dominate, the vast majority of value flows to intermediaries. Traditional corporate laws protect these intermediaries and their investors, but users, creators, and workers receive no protection.

For much of the Internet age, this trade-off has been unavoidable. Open protocols lack sustainable economic models and cannot compete with the capital and coordination capabilities of company-like networks.

Blockchain changes this.

Blockchain and the software protocols deployed on it give rise to a new type of system: blockchain networks. The design goal of these networks is to decentralize control, operate under transparent rules, and exist as shared infrastructure owned and operated by users.

The value of blockchain networks increases with public use and can be distributed to participants — including those at the edges of the network — rather than being captured solely by centralized nodes.

Blockchain enables the possibility to "build networks that operate like networks rather than like companies."

Blockchain technology is at a critical juncture. The last few platform transformations — personal computers, mobile phones, the internet — have been among the most significant technological innovations in human history. The emergence of artificial intelligence is rapidly becoming one of them.

However, all these platform transformations have ultimately led to highly concentrated power and control, with a few individuals determining the fates of countless consumers, creators, and developers who rely on these technologies and services.

As more economic activities become digitized and increasingly shaped by artificial intelligence, the question of "who controls the digital systems we rely on" becomes more critical than ever.

If this control continues to concentrate, the ability to shape outcomes, restrict access, and capture value will follow suit: companies will dominate how networks operate, deciding who benefits.

Decentralized blockchain networks provide an alternative path: infrastructure that no single participant can easily rewrite, censor, or redirect.

In other words, these networks can help transform existing platforms to decentralize them into networks that possess attributes of digital public goods — reducing lock-in effects, decentralizing control, embedding neutrality, decreasing single point failure risks, and returning ownership to users.

The design goal of the CLARITY Act is to make this path truly viable.

Once CLARITY enters full Senate consideration and sees updates, we will share more about what it specifically means for crypto builders.

But if CLARITY successfully navigates the remaining steps of the legislative process, the U.S. legal framework will finally align with the essence of blockchain networks. Builders will be able to operate transparently, raise funds domestically, and build for the long term without being forced to make structural compromises due to regulatory ambiguity.

As more projects operate within U.S. regulatory frameworks instead of outside, regulators and enforcement agencies can obtain better tools to combat the fraud and abuse that have long plagued the industry.

What happens when crypto obtains feasible regulation has already been demonstrated once: the GENIUS Act unleashed a wave of innovation overnight. Today, we can see the presence of crypto in several mainstream applications, from stablecoins to AI agents, and so much more exciting content is yet to come.