The U.S. Senate Banking Committee late on Monday published the full text of a long-awaited bill designed to set out a clear regulatory framework for cryptocurrencies. Referred to as the Clarity Act, the legislation is intended to define the jurisdiction of financial regulators over digital asset activity and is scheduled for a committee vote to advance on Thursday.
The bill addresses five central policy areas that lawmakers and market participants have debated for years. Below is an organized breakdown of those provisions and what the text would require of firms operating in the crypto sector.
Stablecoin rewards
One of the most disputed elements of the Clarity Act concerns payments made on stablecoins - crypto tokens pegged to the U.S. dollar. Under the bill, rewards paid on idle stablecoin balances that closely resemble bank deposits would be prohibited. However, the text allows rewards tied to transaction-based activity, for example when a stablecoin is used to make a payment.
The measure directs the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Department to issue joint rules to implement this restriction. The provision has drawn pushback from distinct constituencies. Banks warn that banning interest-like rewards on deposit-like stablecoins could divert deposits away from the regulated banking system. Crypto firms argue that barring third parties - such as crypto exchanges - from paying interest on stablecoins would create anti-competitive dynamics in the market.
Anti-money-laundering obligations
The bill would require that digital commodity exchanges, brokers and dealers be treated as financial institutions under the Bank Secrecy Act. That classification would subject them to anti-money-laundering (AML) rules and compel compliance with customer identification and due-diligence requirements.
By folding those crypto entities into the Bank Secrecy Act framework, the legislation would put them largely under the same AML regime that governs banks. The text notes that some crypto firms have previously contended they are not subject to equivalent AML obligations, a stance that this bill would address by imposing the statutory requirements directly.
Limited SEC fundraising exemption
The Clarity Act would create a scaled exemption from Securities and Exchange Commission registration for crypto companies raising capital. Under the bill, firms could raise up to $50 million in a single year, and up to $200 million in total, without registering with the SEC as they currently must when raising funds.
Tokens that are tied to investment contracts could still be sold under this regime, but the bill would subject those token sales to a reduced regulatory burden compared with how securities are treated under current law. The effect, according to the text, would be to constrain the SEC’s ability to assert that most token sales constitute illegal securities offerings - a position the regulator has advanced during the Biden administration and one that many courts have supported.
Standards for decentralized finance platforms
Many crypto platforms operate in a so-called decentralized fashion, meaning users interact directly with one another instead of through a centralized intermediary. Existing bank-like rules tend to assume the existence of an identifiable legal entity that intermediates transactions and holds customer funds; decentralized platforms have argued that this structure makes compliance difficult.
The Clarity Act would set a statutory definition for when a platform is sufficiently decentralized. Platforms that do not meet this decentralization threshold would be treated as financial institutions and thus be required to report suspicious activity and monitor transactions in a manner similar to banks.
Under the bill, platforms would not qualify as “decentralized” if they possess the ability to block users or if they include private permissions or hard-coded special privileges that are not available to other users.
Tokenization and securities on the blockchain
Tokenization - converting traditional financial assets like stocks, bonds or real estate into crypto assets - is specifically addressed in the text. The bill clarifies that placing securities on a blockchain does not exempt those instruments from securities laws.
It also requires the SEC to further study the regulatory treatment of tokenized securities and directs that, for regulatory purposes, tokenized securities generally be treated the same as the underlying securities they represent.
Taken together, the provisions aim to provide clarity on a set of questions that have created regulatory uncertainty across the crypto industry, banking sector and capital markets. The bill assigns new or clarified responsibilities to multiple federal agencies and establishes standards that could re-shape how crypto firms, banks and platforms operate in relation to digital assets.
As the committee prepares to vote, the precise contours of implementation will depend on the joint rulemaking processes the bill mandates and on how the definitions and exemptions within the text are interpreted by regulators and courts.