The Clarity Act Advances: 4 Key Takeaways on the Emerging US Regulatory Framework for Digital Assets

On May 14, the Senate Committee on Banking, Housing, and Urban Affairs voted 15–9 to advance the Digital Asset Market Clarity Act (the Clarity Act or the Act).¹  The committee’s bipartisan vote is the most significant step to date toward a comprehensive U.S. regulatory framework for digital assets.

The Act remains subject to further negotiations — particularly with regard to ethics provisions limiting the ability of senior government officials to hold or profit from digital assets during their time in public service. The Act also must clear additional legislative hurdles, including a full Senate vote and reconciliation with the Senate Agriculture Committee’s Commodity Futures Trading Commission (CFTC)-focused digital asset market structure proposal.

Nonetheless, the bill signals where U.S. lawmakers may converge on market structure, enforcement and compliance expectations for the digital asset industry.

Why This Matters Now

For more than a decade, the U.S. digital asset market has operated under a patchwork of regulation by enforcement and ambiguity over regulatory purview of competing agencies. The Clarity Act represents the most coordinated attempt yet to define how existing legal regimes — securities, commodities, banking and anti-money laundering — apply to digital assets.

While the details remain subject to change, the bill reflects the product of extensive negotiations between lawmakers, regulators, law enforcement agencies, banking trade groups, crypto industry participants, academics and consumer advocates. Even in draft form, the 309-page bill offers a substantial preview of the regulatory framework market participants may face.

4 Key Takeaways for Compliance, Enforcement and Litigation

1. The Act Reaches Virtually All Digital Market Participants and Asset Classes

The Clarity Act is a market structure bill. It is not limited to one asset class, one agency or one type of transaction. It is intended to address the threshold legal question that has dominated the U.S. digital assets landscape: when is a digital asset, or a transaction involving it, governed by securities law, commodities law, banking law, anti-money laundering law or some combination of those regimes?

The bill’s answer, broadly, is a three-way allocation: the SEC retains jurisdiction over digital assets that are securities (including “ancillary assets”); the CFTC obtains expanded jurisdiction over “digital commodities” and their spot markets; and banking regulators govern the intersection of digital assets and the banking system, including stablecoins. Anti-money laundering and sanctions obligations run across all three categories, applying to any entity that qualifies as a financial institution under the Bank Secrecy Act (BSA), which will now include digital intermediaries like exchanges.

2. The Act Separates ‘Tokens’ From Transactions Involving Those Tokens

The bill attempts to separate the legal status of a digital token from that of transactions involving that token. It does this principally by introducing the concepts of “network token” and “ancillary asset.”

The bill defines a “network token” as “a digital commodity that is intrinsically linked to a distributed ledger system and that derives, or is reasonably expected to derive, its value from the use of such distributed ledger system.” In practical terms, it is the token that powers, governs or otherwise relates to the functioning of a blockchain. Under the bill, network tokens are not securities. Although, if a token carries with it a “disqualifying financial right,” such as the right to an interest, dividend or other payment, it is excluded from the definition of a network token.

An “ancillary asset” is a network token “the value of which is dependent upon the entrepreneurial or managerial efforts of an ancillary asset originator or a related person.” This means there is an individual or organization still doing the work that drives the token’s value. Accordingly, an ancillary asset is subject to securities law. The bill creates a rebuttable presumption that a network token will be treated as an ancillary asset unless the issuer or, in some cases, an intermediary, submits a written certification to the SEC demonstrating otherwise.

The distinction between a “network token” and an “ancillary asset” suggests that while an issuer’s initial sale may be treated as a securities offering, the token itself could trade as a non-security in secondary markets. At bottom, this distinction is likely to be central to future enforcement actions and private litigation.

3. The Act Creates a New Framework for Token Issuance

The Act creates a disclosure and compliance regime for “ancillary assets” that draws heavily on securities law precedent while attempting to maintain flexibility for innovation. In particular, the Act introduces a new exemption framework (“Regulation Crypto”) that permits “originators” (issuers) to raise capital from retail investors up to certain defined amounts — the greater of $50 million per year for four years or 10% of the outstanding ancillary assets, both subject to a $200 million aggregate cap — with tailored disclosures, rather than full SEC registration. The bill also imposes restrictions that limit the ability of insiders and other related persons to sell tokens into the market depending on certain conditions, including timing and the issuer’s certification status, with the aim of mitigating market manipulation.

4. The Act Expands Banking Compliance Oversight to the Digital Asset Ecosystem

One of the most immediate effects of the Act, if enacted, would be the integration of the digital asset ecosystem into existing financial regulatory frameworks — including the BSA’s financial crimes compliance framework.

Most notably, the Act brings digital commodity brokers, dealers and exchanges within the BSA’s definition of “financial institutions,” subjecting them to core financial compliance obligations, including anti-money laundering programs, customer due diligence and sanctions controls. Similarly, the Act extends anti-money laundering and risk management obligations to participants in decentralized finance arrangements, to the extent they perform functions that resemble financial intermediation. The Act allocates to the SEC, CFTC or “other appropriate self-regulatory organization” the responsibility of overseeing compliance by these digital asset intermediaries.

The Act also introduces new enforcement tools intended to address the risk of illicit finance in the digital assets space. These include the Treasury’s authority to restrict fund transfers involving high-risk foreign jurisdictions; a voluntary transaction-hold safe harbor allowing stablecoin issuers and digital asset service providers to freeze suspicious transactions at law enforcement’s request without civil liability; and a mechanism to facilitate information sharing between industry participants and law enforcement.

Conclusion

The May 14 draft of the Clarity Act offers a concrete preview of how U.S. regulators are likely to approach digital asset market structure, regulation and enforcement. In short, it signals a move from ad hoc enforcement-driven regulation to broader, but potentially more defined, regulation. This shift is likely to shape not only compliance expectations but also the next wave of regulatory investigations and private litigation.

This article is based on the Digital Asset Market Clarity Act (H.R. 3633, 119th Cong., 2d Sess.), Amendment in the Nature of a Substitute, proposed by Sen. Tim Scott of South Carolina on May 12, 2026.

1. Digital Asset Market Clarity Act (H.R. 3633, 119th Cong., 2d Sess.), Amendment in the Nature of a Substitute, proposed by Sen. Tim Scott of South Carolina (May 12, 2026) (“Clarity Act” or the “Act”).