Senator Lummis Drops Bombshell: CLARITY Act to Finally End Crypto Regulatory Chaos for Investors
Washington's favorite crypto cowgirl just lassoed the SEC's ambiguity.
Senator Cynthia Lummis (R-WY) is back with her signature move—legislation that doesn't just nibble around the edges of crypto regulation but drives a stake through its heart. The CLARITY Act promises what the SEC couldn't deliver in a decade: actual rules of the road.
Finally—a law that treats digital assets like the $2T asset class they are instead of Schrödinger's securities.
Wall Street banks will hate this. Their regulatory arbitrage playground? Gone. The act forces clarity on everything from stablecoins to DeFi protocols—no more 'regulation by enforcement' nonsense.
Lummis didn't just cross party lines; she bulldozed them. The bill's co-sponsor? None other than progressive firebrand Elizabeth Warren. When these two agree, you know the existing system is broken beyond repair.
Of course, the usual suspects are crying foul. 'Innovation-stifling' they scream—as if innovation thrives when VCs spend 40% of their fund on legal fees instead of builders.
The kicker? This might actually pass. With 2024 election chaos looming, both sides want a win they can sell to crypto-holding voters. Nothing unites politicians like the scent of campaign donations.
Welcome to Washington's latest episode of 'Who Wants to Be a Millionaire?'—where the prize is regulatory capture and the questions are all written by lobbyists.
The CLARITY Act terms digital assets “commodities”
The CLARITY Act dictates that digital assets, also labeled as “ancillary assets,” are not securities and that their resale doesn’t constitute investment activity. However, it sets conditions under which such transactions could still be classified as investment contracts.
The bill declares digital assets commodities, hence they will fall more squarely under the authority of the Commodity Futures Trading Commission (CFTC), which will work in tandem with the Securities and Exchange Commission (SEC). The bill also requires the SEC to modify its regulatory framework for continued investor protection.
Moreover, the legislation touches on various critical topics, including banking services, transparency obligations, self-custody provisions, and anti-money laundering protocols.
Senator Tim Scott, the lead on the release of the draft, commented, “I’m grateful for the hard work of our House counterparts to craft smart, bipartisan legislation, and I look forward to building on their work here in the Senate. Working with President Trump, we can deliver a comprehensive, bipartisan regulatory framework for digital assets.”
The Digital Asset Market Clarity (CLARITY) Act just cleared the House with a 294-134 bipartisan vote. The Senate is now taking over where the House of Representatives left off.
Nonetheless, some analysts do not support the bill. Mark Hays, associate director for cryptocurrency and financial technology at the Americans for Financial Reform nonprofit, argued that the bill will encourage double-dealing for any platforms with less strict rules.
Amanda Fischer, policy director and COO at the nonprofit Better Markets and former SEC chief of staff, argued similarly, saying the Clarity Act is just an attempt to formalize the current business models of crypto firms, leaning more toward accommodating companies than aligning with existing securities laws. She added that the bill provides much weaker oversight of insider trading, market manipulation, and surveillance practices in the crypto sector.
Senator Cynthia Lummis says the CLARITY Act will provide regulatory clarity for investors
Senate banking leaders call on stakeholders and industry leaders to submit input on the draft. The Senate Banking Subcommittee on Digital Assets Chair Cynthia Lummis also shared her view on the draft, claiming that uncertainty around digital asset regulation is finally being addressed.
According to Lummis, the draft strikes a thoughtful balance between offering regulatory clarity for innovators and safeguarding consumer interests.
She added that the market structure bill will provide “clear distinctions between digital asset securities and commodities, modernize our regulatory framework, and position the United States as the global leader in digital asset innovation.”
Meanwhile, according to Coinbase Chief Executive Officer Brian Armstrong, the TRUMP administration has asked for the bill to be passed by September.
President Donald Trump just signed the GENIUS Act into law. The legislation is now the first crypto-specific law, setting up a regulation regime for dollar-backed stablecoins. The legislation supporters believe it will provide more clarity for the industry and ensure the US is the global crypto capital. Some also expect the law to encourage digital asset adoption.
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