On May 29, House Financial Services Committee Chairman French Hill (R-AR) introduced the Digital Asset Market Clarity (CLARITY) Act, a pivotal piece of legislation aimed at establishing a regulatory framework for crypto assets in the United States.
Co-sponsored by eight other members of Congress—five Republicans and three Democrats—the bill seeks to provide much-needed clarity and protection within the digital asset ecosystem.
CLARITY Act Mandates Transparency For Crypto Firms
Chairman Hill emphasized the importance of the CLARITY Act, stating, “Our bill brings long-overdue clarity to the digital asset ecosystem, prioritizes consumer protection and American innovation, and builds off our work in the 118th Congress.”
Hill further expressed optimism about the bill’s potential to secure America’s position as a global leader in digital assets and looks forward to presenting it to President Donald Trump, who has garnered massive support from crypto investors with his latest decisions in terms of regulation and innovation.
The CLARITY Act aims to protect consumers by mandating that digital asset developers and customer-facing firms provide essential disclosures to their clients. It also requires these companies to keep customer funds separate from their own, addressing potential conflicts of interest that could arise.
According to a summary released by the House Financial Services Committee, these provisions are designed to foster a safer environment for consumers engaging with digital assets.
Additionally, the legislation aims to facilitate the growth of digital asset projects by providing developers with a clear pathway to secure funding under the oversight of the Securities and Exchange Commission (SEC).
This clarity will enable market participants to trade digital commodities through intermediaries and exchanges regulated by the Commodity Futures Trading Commission (CFTC).
SEC And CFTC Roles In Regulating Digital Assets
One of the bill’s key features is its intention to delineate responsibilities between the SEC and the CFTC. By establishing distinct registration regimes, the CLARITY Act will allow customer-facing digital asset firms to operate lawfully, assuring consumers that they are engaging with properly regulated entities.
The introduction of the CLARITY Act follows a bipartisan hearing on digital assets that took place about three weeks earlier. That hearing aimed to discuss a Digital Asset Market Structure Discussion Draft but became contentious when several Democratic lawmakers walked out in protest over issues related to the Trump administration’s involvement in cryptocurrency.
Rep. Maxine Waters (D-CA), the ranking member of the House Financial Services Committee, criticized the bill’s introduction, noting that it occurred after Hill declined to include provisions that would restrict Trump from benefiting financially from cryptocurrency ventures.
Earlier testimony from attorneys and industry executives during a hearing on April 9 highlighted the need for adjustments to existing securities laws to better accommodate the unique characteristics of digital assets.
Featured image from DALL-E, chart from TradingView.com
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