#CLARITYActAdvances

In a significant breakthrough for the cryptocurrency industry, the landmark CLARITY Act has taken a major step forward, advancing through a key Senate committee and bringing comprehensive digital asset regulation closer to reality than ever before .

The Senate Agriculture Committee successfully marked up and advanced its portion of the market structure legislation on January 29, 2026, clearing a critical procedural hurdle after months of delays and intense negotiations . The measure, which focuses on digital commodity intermediaries and expands Commodity Futures Trading Commission authority over crypto spot markets, passed by a narrow 12–11 party-line vote . While the vote ultimately fell along partisan lines, committee leadership has committed to working across the aisle as the bill moves toward the full Senate floor .

House Financial Services Committee Chairman French Hill celebrated the progress, stating, "Last July, the House overwhelmingly passed the bipartisan CLARITY Act. Since then, Senate Agriculture Committee Chairman John Boozman, Senate Banking Committee Chairman Tim Scott, and other key Senate partners have continued to advance Congress' critical work on market structure." He added that he looks forward to working with Senate colleagues to "ensure key pillars of CLARITY are addressed so we can deliver a bipartisan, bicameral product to President Trump's desk" .

What the CLARITY Act Actually Does

The CLARITY Act represents the most comprehensive attempt yet to establish federal rules of the road for digital assets. At its core, the legislation draws a bright line between Securities and Exchange Commission and CFTC jurisdiction, replacing the SEC's long-criticized regulation-by-enforcement approach with a workable statutory framework .

For digital commodities—assets like Bitcoin and Ethereum that meet decentralization tests—the bill grants the CFTC exclusive regulatory jurisdiction over spot markets . Exchanges, brokers, and dealers handling these assets must register with the CFTC and comply with core principles including trade monitoring, record keeping, and conflicts of interest safeguards .

For securities, the SEC retains authority, but the bill creates a tailored exemption allowing digital asset projects to raise capital through offering statements without full registration, subject to a $75 million annual cap . Crucially, the legislation clarifies that software developers who publish or maintain code without controlling customer funds are not treated as financial intermediaries—a key protection for the decentralized finance ecosystem .

The bill also includes what the Senate Banking Committee describes as "the strongest illicit finance framework Congress has ever considered for digital assets," ensuring centralized intermediaries face anti-money laundering obligations and giving Treasury new tools to combat sanctions evasion .

The Stablecoin Yield Battle

Despite this progress, significant hurdles remain—chief among them the explosive debate over stablecoin rewards . The GENIUS Act, signed into law in July 2025, explicitly prohibits stablecoin issuers from offering interest or yield directly to holders . However, crypto exchanges and platforms have found a workaround: they can share back a portion of the interest generated from reserve assets, effectively offering rewards to customers who hold stablecoins on their platforms .

The banking industry has mobilized aggressively against this practice. The American Bankers Association sent a letter to the Senate warning that the "perceived loophole" threatens to displace billions in community bank deposits, potentially affecting lending to small businesses, farmers, and homebuyers . They argue that if left unaddressed, the exception could "swallow the rule" and put at risk $6.6 trillion in community bank deposits .

The White House has stepped in to mediate, convening banking trade groups and crypto industry representatives to resolve the disagreement . Discussions have been constructive, though no immediate compromise has been reached. Both sides are working toward a solution by the end of February, aligning with administration expectations .

DeFi and Developer Protections

Another contentious area involves decentralized finance oversight. The bill takes a nuanced approach: it protects software developers and peer-to-peer activity while ensuring that centralized intermediaries interacting with DeFi protocols face tailored risk-management and compliance standards . The legislation focuses regulatory attention on control rather than code, drawing a clear line designed to balance innovation with investor protection .

However, some industry observers have raised concerns about certain provisions. Galaxy Research warned in a recent report that the latest Senate draft could represent "the largest expansion of financial surveillance powers since the USA PATRIOT ACT," specifically pointing to new tools allowing the Treasury Department to impose special measures on digital-asset transactions and temporarily freeze transactions almost instantly .

The Path Forward

With the Agriculture Committee's portion now advanced, all eyes turn to the Senate Banking Committee, which must still mark up its version of the legislation . Banking Committee members from both parties have told industry groups they want to avoid repeating prior cycles in which House-passed digital asset bills died in the Senate without committee votes .

Once both committees complete their work, House and Senate leaders must reconcile the two packages into a final agreement that can pass both chambers and reach the President's desk . House Agriculture Committee Chairman Glenn Thompson acknowledged the work ahead: "This is a key milestone in the Senate's work on the bipartisan CLARITY Act, but there is still more work to be done" .

Why It Matters

The stakes could hardly be higher. Industry experts estimate that trillions of dollars in institutional capital remain sidelined, waiting for regulatory certainty before entering digital assets . One analyst recently forecast that the CLARITY Act could unlock more than $5 trillion in dormant capital over time, potentially driving the total crypto market capitalization beyond $4 trillion .

Coinbase's institutional strategy chief John D'Agostino framed the urgency in global terms: "The rest of the world is moving forward," he said, citing Europe's MiCA framework and regulatory clarity in jurisdictions like the UAE as competitive threats forcing congressional action . He noted that 2024 saw "a massive flight of talent, of people, of intellectual capital, and of technology growth outside of the US"—a trend that clear rules could reverse .

The CLARITY Act represents a fundamental shift from uncertainty to clarity, from enforcement by guidance to enforcement by statute. As the Senate Banking Committee fact sheet puts it: "Clear regulation protects investors—uncertainty does not. The real risk is in failing to provide a clear regulatory framework" .

For an industry that has spent years navigating a patchwork of conflicting signals and enforcement actions, that clarity cannot come soon enough. The question now is whether Congress can bridge its remaining differences and deliver the comprehensive market structure legislation that crypto has been waiting for.