The CLARITY Act: From 2013 to 2026—After 13 Years, Is This Long-Awaited Regulatory Turning Point Finally Here? On May 14, the U.S. Senate Banking Committee formally advanced the Digital Asset Market #CLARITY Act (hereinafter referred to as the #CLARITY Act), passing it by a vote of 15 in favor and 9 opposed. With support from Democratic Senators Ruben Gallego and Angela Alsobrooks, this bipartisan vote has been widely regarded as a landmark moment in the history of U.S. cryptocurrency development. From a macro perspective of financial regulatory history, the advancement of this bill holds significance comparable to the Securities Act of 1933, which established the foundational principles of investor protection and capital formation in U.S. capital markets. For over a decade, the absence of a systematic and clear regulatory framework for cryptocurrency in the United States has led to market distortions, innovation outflows, and exposed consumers to significant systemic risks. The core mission of the #CLARITY Act is to establish a comprehensive federal regulatory framework for the cryptocurrency industry, clearly delineating the boundaries between commodities and securities, thereby achieving a critical balance between compliance, market structure, and industry growth. However, as with any major institutional breakthrough, the bill still faces complex political negotiations and legislative hurdles on its path to becoming law. I will conduct a structured, in-depth analysis of this legislation across four key dimensions: market structure transformation, stablecoin dynamics, conflicts between public blockchains and corporate law, and current uncertainties in the legislative process. The Legislative Evolution and Drivers of the #CLARITY Act Over the past decade, America’s failure in cryptocurrency regulation has fundamentally stemmed from regulators attempting to force 21st-century distributed technologies into 20th-century legal frameworks. This “regulation by enforcement” model has not only created judicial confusion but also resulted in severe administrative overreach. I. The Prisoner’s Dilemma of Regulatory Lag and Innovation Drain Due to the prolonged absence of a unified federal regulatory framework, prolonged jurisdictional disputes have persisted between the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission). This regulatory uncertainty has produced two detrimental outcomes: - Bad money drives out good: Responsible developers struggle due to unclear compliance pathways, while speculative “bad actors” exploit regulatory vacuums to design arbitrage-driven products that exploit consumers—ultimately triggering multiple major market disasters. - Reshaping the global innovation landscape: Regulatory ambiguity has forced numerous crypto startups, technical talent, and venture capital to relocate overseas. The European Union’s Markets in Crypto-Assets Regulation (MiCA) and the United Kingdom’s crypto regulatory framework have already provided more predictable environments for digital assets. Although no jurisdiction globally has yet designed a “perfect” regulatory model, if the U.S. continues to stand idle, the long-term cumulative effect will lead to a complete transfer of dominance over core digital assets. This is analogous to if representative enterprises of the internet era (#Amazon, #Google, #Microsoft, #NVIDIA, etc.) had all originated outside the U.S.—the impact on America’s national competitiveness would be devastating. II. Evolution of Legislative Paradigms The #CLARITY Act did not emerge in a vacuum; it is the culmination of multiple rounds of bipartisan legislative negotiation and iteration. Its legal logic primarily builds upon two core House proposals: - The 21st Century Financial Innovation and Technology Act (FIT21, H.R. 4763) of 2024: This bill aimed to clarify jurisdictional divisions between the SEC and CFTC and establish criteria for identifying decentralized networks. It passed the House with overwhelming bipartisan support (279–136). - The House version of the #CLARITY Act (H.R. 3633) of 2025: Passed in July 2025 with even higher support (294–134), including 78 Democratic votes, further solidifying legal consensus on market structure legislation. On the Senate side, since Senators Lummis and Gillibrand first introduced a bipartisan crypto framework in 2022, after several iterations and revisions, the Senate Banking Committee finally advanced its core text in May 2026 after incorporating diverse stakeholder input. This marks a fundamental shift in the U.S. legislative stance toward digital assets—from initial risk aversion to recognizing them as institutional tools for national financial strategy and geopolitical competition. A key empirical example is the passage of the #GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) in July 2025. By establishing a clear regulatory framework for stablecoins, this act did not stifle innovation; rather, it unleashed a wave of innovation that reinforced the dollar’s long-term dominance in the digital era. The current #CLARITY Act follows this same logic, seeking to extend its scope to the entire digital asset market structure. Networks Are Not Companies—The Legal Foundation Revolution of the #CLARITY Act The most profound institutional contribution of the #CLARITY Act lies in its legal recognition that networks fundamentally differ from traditional corporations in both organizational structure and economic models. I. Conflict Between Industrial-Era Corporate Law and Information-Era Network Architecture For over a century, modern corporate law has been meticulously designed around “exclusive control” and “capital formation,” grounded in Coase’s “The Nature of the Firm”—which posits that centralized management and ownership structures reduce internal transaction and coordination costs. Traditional securities laws (e.g., the Securities Act of 1933 and the Securities Exchange Act of 1934) assume the existence of a clear, enduring controlling entity that must provide ongoing disclosures to manage public trust in founders. However, blockchain-based decentralized networks operate on entirely different economic logic: - Decentralized Control: Blockchain networks rely on transparent, immutable code rules to coordinate thousands of mutually distrustful nodes, capital sources, and resources—not a centralized ownership center. - Value Distribution to the Edges: Traditional corporate platforms (#Uber, #Spotify) exhibit strong monopolistic extraction tendencies. Ride-hailing platforms extract a significant portion of value created by drivers; creators on digital music streaming services receive minimal royalties. This is because traditional corporate law prioritizes protecting intermediaries and their investors—not peripheral participants. - Communal Network Effects: Blockchain enables networks that truly function as networks—not as corporations. Network value grows with public usage and can be directly distributed via protocol tokens to actual participants and builders at the network’s edge, eliminating intermediary rent-seeking. II. Legal Redemption from “Objectification” RegulationApplying securities regulatory frameworks like the Howey Test—designed for corporations—to decentralized networks inevitably distorts those networks into corporate structures, forcing control back into the hands of a few and reintroducing intermediaries, thereby stifling the core advantages of blockchain networks. The core design of the #CLARITY Act is to provide a clear, compliant pathway for blockchain networks and digital assets that have achieved “sufficient decentralization” to exit the jurisdiction of securities laws. By clearly delineating the regulatory boundaries between the #SEC (responsible for securities-like, centrally controlled assets) and the CFTC (responsible for decentralized, commodity-like assets), the Act enables builders to avoid structural compromises forced by outdated regulations, allowing them to raise capital and build long-term projects in the U.S. under secure and compliant conditions. Stablecoin Interest Dynamics and Structural Advantages for $Circle As the total supply of global USD-pegged stablecoins surpasses $300 billion—with $USDT and $USDC together accounting for approximately 97% of market share—stablecoins have evolved from mere exchange fiat on-ramps into critical infrastructure for global cross-border payments and on-chain settlement. The latest compromise on stablecoin yield within the #CLARITY Act has become the focal point of market attention. I. Economic Logic Behind the Yield Compromise According to a research report by Wall Street investment firm #Bernstein, the current version of the #CLARITY Act has reached a subtle yet far-reaching compromise on stablecoin interest payments: Prohibition of Passive Yield: The Act prohibits stablecoin issuers from paying interest that is economically equivalent to bank deposits to passive token holders. This provision is legally grounded in preventing stablecoins from becoming de facto unregistered money market funds or deposit substitutes, which could trigger systemic financial risks such as mass bank deposit flight (de-banking). Permitted Active Incentives: Simultaneously, the Act permits reward mechanisms tied to genuine transactions, payments, and real-world usage. This compromise structurally benefits Circle and the USDC ecosystem at an economic level. II. Strengthening and Defending #Circle’s Business Model Regulatory Legitimization of Existing Model: $Circle currently relies heavily on incentive programs offered in partnership with strategic collaborators like #Coinbase to reward $USDC holders for holding and using the token. The Act’s exemption for “active incentives” formally recognizes Circle’s existing compliant distribution and user retention pathways under federal regulation. Blocking High-Yield Malicious Competition: This clause effectively restricts other stablecoin issuers lacking regulatory licenses or operating offshore from competing aggressively by offering high yields (e.g., interest-bearing or yield-generating stablecoins). It significantly raises barriers to entry for new competitors and locks in the first-mover advantage of incumbent leaders. Protecting Reserve Asset Spread Income: By reinforcing the legal classification of stablecoins as “payment tools” rather than “deposit substitutes,” the Act helps Circle maintain its critical spread-income model based on its vast reserves of U.S. Treasuries and cash—the primary source of its cash flow. For these reasons, Bernstein continues to assign #Circle an “Outperform” rating with a $190 price target. III. #USDC’s Penetration into On-Chain Ecosystems and Emerging Technologies On-chain data shows that $USDC’s share in on-chain payments and wallet transfers continues to rise. Particularly in the rapidly evolving AI era, $USDC accounts for over 99% of payments within the AI Agent payment protocol x402. AI agents require payment mediums with minimal friction, instant settlement, and regulatory compliance—without reliance on traditional bank accounts. $USDC’s regulatory clarity and composability have made it the de facto standard for the AI-driven digital economy. Additionally, #Circle’s #ARC testnet has processed 244 million transactions to date. Its prior $222 million fundraising through $ARC token pre-sale attracted top-tier institutions including #a16z crypto, Apollo Funds, ARK Invest, and traditional asset management giant #BlackRock. This further demonstrates that once regulatory clarity is established, the convergence speed between traditional finance giants and Web3-native capital will far exceed market expectations. Legislative Timeline and Political Negotiations Although the passage of the #CLARITY Act by the U.S. Senate Banking Committee is widely regarded as a historic victory, several senior analysts and legislative experts warn that significant procedural hurdles remain before it becomes law. I. Core Legislative Bottlenecks Reconciliation of House and Senate Texts: The version approved by the Senate Banking Committee must now be merged with legislation under the jurisdiction of the Senate Agriculture Committee to form a unified Senate market structure bill. 60-Vote Threshold in the Full Senate: The consolidated bill must then proceed to full Senate debate. To overcome potential filibusters, it requires at least 60 votes for passage—meaning support beyond current Republican votes will be needed from a significantly larger number of Democratic senators. Final Reconciliation and Presidential Signature: After Senate passage, it must be reconciled with the House-approved version to produce a unified text before being sent to the White House for presidential signature. II. Tight Congressional Calendar and Time Window Pressures According to recent disclosures by crypto journalist #Eleanor Terrett on social media, the current political and congressional timeline is far from favorable: Delay Due to May Recess: Due to ongoing internal Republican disagreements over core issues such as border security legislation, the Senate failed to advance related agendas before its Memorial Day recess. This means negotiations and voting timelines for the #CLARITY Act must now be pushed until early June after Congress reconvenes. Crowded June Agenda: Upon reconvening, the Senate calendar is already extremely congested. Lawmakers must prioritize urgent legislation including housing bills, agricultural bills, and the June 12 deadline for reauthorizing the Foreign Intelligence Surveillance Act (FISA). Probability Assessment and Delay Expectations: Under these conditions, markets widely anticipate that full Senate consideration of the #CLARITY Act will likely be delayed until July 2026. If reconciliation between both chambers and presidential signature cannot be completed before Congress adjourns for summer recess in August, the bill’s chances of passage will be substantially diminished. While investment bank TD Cowen has raised its probability estimate for final passage from one-third to 40%, it notes that substantive disagreements remain unresolved—particularly regarding consumer protection details, conflict-of-interest clauses, and ethical restrictions. #Polymarket currently predicts a 62% probability of passage within 2026, reflecting market optimism tempered by considerable caution. Conclusion: Institutional Bargaining and Future Consensus Despite formidable obstacles ahead, the passage of the #CLARITY Act by the Senate Banking Committee has sent an irreversible signal: The crypto industry in the U.S. is moving from the margins toward the center of mainstream institutional frameworks.As Patrick Witt, White House advisor on crypto policy, stated, if this bill ultimately passes, it will provide approximately 90% of the regulatory framework and policy clarity the entire industry needs. It will end the chaotic uncertainty of the past decade’s shifting regulatory interpretations, offering developers, consumers, and traditional financial institutions migrating trillions of dollars in assets on-chain a clear “operations manual.” The evolution of financial history shows that institutional frameworks are never built overnight—they emerge gradually through constant friction, trial and error, negotiation, and compromise. From the 2025 GENIUS Act’s unlocking of stablecoin innovation to the current CLARITY Act’s legal restructuring of the broader crypto market, U.S. lawmakers are striving to establish on this digital frontier a modern regulatory system that fosters innovation while safeguarding financial stability and consumer protection.