US Senate Banking Committee Publishes 309-Page Draft of Crypto "Clarity Act"

The US Senate Banking Committee has released an expanded 309-page discussion draft of the Digital Asset Market Clarity Act, widely known as the "Clarity Act." The proposal has grown from a 278-page version circulated in January and is being positioned as a major step toward a federal rulebook for digital assets, as the industry pushes to replace "regulation by enforcement" with clearer statutory standards. SEC vs. CFTC: Core jurisdictional split remains The updated draft keeps the basic division of oversight intact. The Securities and Exchange Commission (SEC) would supervise most initial token sales, while the Commodity Futures Trading Commission (CFTC) would oversee spot markets and trading once tokens are considered sufficiently decentralized or otherwise "mature." What the bill aims to clarify The Clarity Act frames itself as a comprehensive framework for US digital-asset markets, defining three primary categories: - Digital Commodities: under CFTC jurisdiction. - Digital Asset Securities: under SEC jurisdiction. - Payment Stablecoins: regulated through a mix of Federal Reserve oversight and state regulators. Supporters say these definitions are intended to reduce legal ambiguity that has fueled years of litigation between the SEC and major exchanges. Stronger investor protections and anti-fraud powers A notable change in the 309-page text is expanded investor-protection language. The draft explicitly bolsters the SEC's authority to pursue insider trading and anti-fraud cases tied to specific crypto offerings, a provision viewed as a concession to lawmakers concerned about retail-investor risks. Stablecoins: curbing "bank-style" interest One of the most debated sections targets stablecoin practices that resemble unregulated deposit products. Under the draft: - Passive yield prohibited: platforms would be barred from paying "bank-style" interest simply for holding payment stablecoins such as USDC or USDT. - Activity-based rewards allowed: rewards linked to staking, liquidity provision, governance, or loyalty programs would remain permissible. The approach aims to reserve straightforward interest-bearing accounts for licensed banks while preserving incentives tied to DeFi and broader on-chain activity. Tokenization narrowed to tokenized securities; "Build Now Act" added The tokenization section has been tightened. Rather than relying on broad "real-world assets" (RWA) language, the current draft centers more directly on tokenized securities, which could offer clearer routes for traditional financial institutions to bring equities and bonds on-chain. The draft also incorporates the "Build Now Act," housing-related legislation not directly connected to crypto. The addition appears aimed at broadening political support by appealing to senators focused on urban development and affordable housing. What comes next The Senate Banking Committee is expected to move toward a formal markup session in the near term. Market participants will be watching for changes that could affect specific tokens and platforms as the bill advances.