Digital Asset Market Clarity Act: The increasing role of the CFTC in regulating crypto markets

Representative French Hill (R-AR), Chairman of the House Financial Services Committee, introduced the Digital Asset Market Clarity Act (Clarity Act) along with five Republican and three Democratic co-sponsors.[1] The Clarity Act was introduced on May 29, 2025, and establishes a foundational regulatory framework for digital asset markets, positioning the Commodity Futures Trading Commission (CFTC) at the center of these efforts. The Clarity Act has now passed through both the House Committee on Agriculture and the House Committee on Financial Services.

The Clarity Act is likely to receive continued scrutiny, but its bipartisan introduction and support within both committees[2] demonstrates enduring support for legislation addressing digital assets and the CFTC’s important role.

Below, we outline the Clarity Act’s key provisions concerning the CFTC, with a focus on its expanded enforcement authority over digital assets.

Overview of the Clarity Act

The Clarity Act is the outcome of efforts that started during the 118th Congress and formalizes a draft shared earlier this month by the House Financial Services Committee. Its introduction coincides with the Senate’s consideration of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act of 2025, which provides a regulatory framework for stablecoins.

The Clarity Act defines a structure for the regulation of digital assets and related markets, distinguishing between those digital assets subject to the jurisdiction of the Securities and Exchange Commission (SEC) and “digital commodities,” which would grant CFTC exclusive jurisdiction. The CFTC’s jurisdiction[3] would encompass digital commodity exchanges, brokers, and dealers.

Key elements of the Clarity Act

• Definitions of digital assets: The Clarity Act would divide digital assets into three categories: (1) securities, (2) commodities, and (3) stablecoins. “Digital commodity” is broadly defined as “a digital asset that is intrinsically linked to a blockchain system, and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system.” Although the definition of digital commodity explicitly exempts investment contracts, if passed, it is expected to significantly narrow the scope of digital assets that constitute securities.
  
  
• CFTC oversight and responsibilities of digital commodities: The Clarity Act would grant exclusive regulatory jurisdiction for digital commodities to the CFTC, including digital commodity exchanges, brokers, and dealers, except when digital commodities are transacted by SEC-registered exchanges, brokers, and dealers. In these limited circumstances, the SEC would retain anti-fraud and market-manipulation authority. Otherwise, under the Clarity Act, digital commodities, by definition, would not be securities nor subject to the SEC’s regulatory jurisdiction. Separately, the CFTC and SEC would share oversight of “permitted payment stablecoins.” Furthermore, digital commodity broker-dealers subject to registration under the Clarity Act would be required to be members of a registered futures association, which will impose its own additional requirements.
  
  
• Enforcement authority and fraud provisions: Digital exchanges, digital commodity brokers, and digital commodity dealers would be subject to the CFTC’s anti-fraud and market manipulation enforcement authority. In addition to existing enforcement authorities granted to the CFTC, the Clarity Act would require broker-dealers to develop business conduct standards. The Clarity Act also includes an explicit “prohibition on fraudulent practices,” including schemes to defraud fraudulent or deceitful conduct with customers or counterparties, and any fraudulent, deceptive, or manipulative practice. Moreover, the Clarity Act would exempt certain decentralized finance activities from its provisions, but it would not exempt these activities from the “anti-fraud, anti-manipulation, and false reporting enforcement authorities of the CFTC.”
  
  
• Mature blockchain system: The Clarity Act includes the concept of a mature blockchain system, which is “a blockchain system, together with its related digital commodity, that is not controlled by any person or group of persons under common control.” Once a blockchain system is certified as mature, a digital asset relying upon that system may be exempted from certain disclosure requirements.
  
  
• Strong federal preemption: The Clarity Act includes strong federal preemption language that preempts state regulation of digital commodities, which would include regulation under state securities laws.
  
  
• Bank Secrecy Act and anti-money laundering (AML) compliance: The Clarity Act would explicitly add digital commodity exchanges, brokers, and dealers to the list of financial institutions subject to the Bank Secrecy Act.

Key takeaways

• This is still proposed legislation, and it is likely to attract continued attention and further calls for amendment as it advances to the full House. However, it has been introduced at a time of heightened interest in both Houses of Congress to take action on digital asset legislation, and its bipartisan support in two committees improves its chances of passing.
  
  
• The CFTC is likely to play a central role in any future regulatory framework for digital assets. Its success may be impacted by the recently announced departures of multiple commissioners.
  
  
• Even if the CFTC ultimately has exclusive jurisdiction over certain digital assets, to the extent such assets are offered and sold as securities (eg, in the form of investment contracts), the SEC will continue to have jurisdiction as well.
  
  
• Congress appears committed to extending Bank Secrecy Act and AML requirements for digital commodity market participants. AML enforcement by executive branch agencies in the cryptocurrency space will likely remain a focus, particularly where it involves the Trump Administration’s enforcement priorities, including national security and preventing money laundering and terrorist financing by Iran and China.

If enacted, the Clarity Act would represent a significant step towards a unified regulatory framework for digital asset markets, but many steps remain.

For more information, please contact the authors.

^{[1] Co-sponsors: House Committee on Agriculture Chairman Glenn "G.T." Thompson (R-PA), House Majority Whip Tom Emmer (R-MN), House Committee on Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence Chairman Bryan Steil (R-WI), House Committee on Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development Chairman Dusty Johnson (R-SD), Representative Warren Davidson (R-OH), House Agriculture Committee Ranking Member Angie Craig (D-MN), Representative Ritchie Torres (D-NY), and Representative Don Davis (D-NC). Clarity Act (H.R. 3633), https://www.congress.gov/bill/119th-congress/house-bill/3633/text/ih
[2] Passing 47-6 in the House Committee on Agriculture and 32-19 in the House Committee on Financial Services.
[3] This exclusivity is subject to some exceptions. The SEC maintains some enforcement authority for digital commodities traded on SEC-registered exchanges or by SEC-registered brokers and dealers. For stablecoins and other hybrid digital assets with the features of a commodity and a security, CFTC and SEC share responsibilities.}