Digital assets are on the verge of the next decisive chapter in their development. After years of regulatory uncertainty, the Digital Asset Market CLARITY Act could create a clear and consistent regulatory framework for digital assets for the first time. The CLARITY Act addresses key issues of market structure, from the regulatory distinction between digital commodities and securities to binding requirements for the prevention of market abuse. The Act could thus provide an important impetus for institutional market participation and the sustainable integration of cryptoassets into the existing financial system.
Günther Kornfellner
26 February 2026
German version
The US Digital Asset Market CLARITY Act will reorganize regulatory oversight of blockchain-based assets. Like many disruptive technologies, blockchain applications initially attracted the attention of tech enthusiasts and pioneers. However, this limited acceptance is not sufficient for sustainable market penetration. It is crucial to close the gap between early adopters and the mass market and take the next step on the technology adoption curve. As empirical analyses on the topic of tokenization of financial products show, regulatory clarity is one of the key success factors for the sustainable development of digital assets.
With the passage of the GENIUS Act in July 2025, which focuses on stablecoins, US regulators have made important regulatory progress. However, this step is not sufficient for the further development of the digital asset market, as the scope of the law is primarily limited to stablecoins that are pegged to a stable reference value such as the USD and serve primarily as digital means of payment, while key issues relating to the overall market structure remain unaddressed.
This regulatory gap is to be closed by the passage of the Digital Asset Market CLARITY Act. However, the passage of the CLARITY Act has been delayed. The two meetings at the White House in early February were intended to break the deadlock. According to reports, no compromise was reached at either meeting, as banking sector representatives presented a document at the February 10 meeting indicating that they remain committed to prohibiting interest payments on stablecoins and that other types of compensation should only be allowed under very limited circumstances.
Advisers in the White House and Congress remain optimistic about the prospects for the CLARITY Act, and Senate Majority Leader John Thune (R-South Dakota) has reportedly promised to schedule time for a full Senate debate on the bill in the spring if it passes committee.
The bill aims to create a regulatory framework that is particularly important for traditional financial service providers. This framework will enable them not only to cautiously approach the crypto market through pilot projects, but also to fully integrate crypto assets into their business models.
The aim of the Digital Asset Market CLARITY Act is to create a clear regulatory distinction between so-called digital commodities, which will in future be subject to supervision by the Commodity Futures Trading Commission (CFTC), and digital asset securities, which are classified as securities and thus fall within the remit of the Securities and Exchange Commission (SEC).
A key criterion for determining regulatory jurisdiction is the so-called maturity test, which is a formal certification procedure administered by the SEC and supplements the existing Howey Test. The Howey Test is traditionally used to classify an asset as a security and is historically tailored to traditional financial products.
In contrast, the maturity test provided for in the CLARITY Act pursues a decentralization-based approach that takes into account the technological characteristics of blockchain-based systems. A digital asset is classified as a digital commodity and subject to CFTC supervision if the underlying blockchain is classified as “mature.”
A blockchain is considered mature when it has a high degree of decentralization and no single party or clearly definable group exercises dominant control over the network. The Commodity Futures Trading Commission (CFTC) was realigned with the appointment of Michael Selig, who was sworn in on 22 December 2025, and is considered crypto friendly.
If a digital asset is not yet considered mature, it may be classified as a digital security subject to oversight by the Securities and Exchange Commission (SEC). Since Paul Atkins took office on 21 April 2025, the SEC has been perceived as significantly more open to the crypto industry, especially compared to his predecessor Gary Gensler, who was widely criticized for his confrontational regulatory policy, as he primarily focused on lawsuits against crypto companies to apply existing securities laws to digital assets instead of developing clear new regulations.
This approach would link the regulatory classification of digital assets for the first time to understandable and objective criteria such as the degree of decentralization and the governance structure of a network, rather than to the way in which securities are issued. At the same time, the CLARITY Act creates a clear mechanism for interaction between the two central supervisory authorities, with the SEC formally classifying the degree of maturity and the CFTC responsible for ongoing market supervision of digital assets, provided they are classified as digital commodities.
The Digital Asset Market CLARITY Act would establish, for the first time, a binding regulatory framework explicitly aimed at protecting market participants, and consumers in particular. A key provision concerns the mandatory separation of customer funds and proprietary funds of cryptocurrency platforms. This requirement aims to avoid conflicts of interest and significantly reduce the risk of insolvency for customers. The relevance of this measure was particularly highlighted by the collapse of the FTX crypto exchange, during which customer funds were not properly segregated, misappropriated, and used to finance the exchange’s own activities.
In addition, the CLARITY Act provides for a comprehensive ban on market manipulation practices, including artificially inflating trading volumes (“wash trading”), placing misleading orders (“spoofing”), exploiting customer orders for one’s own transactions (“front running”), deliberately spreading false information to artificially inflate the price of an asset and then selling it at a profit (“pump and dump”), and insider trading. Overall, the draft law addresses key structural weaknesses in the crypto market that have contributed significantly to increased market volatility and a loss of market confidence.
The structural deficiencies of the crypto market that had been identified previously came to light in October 2025 in one of the largest liquidation events in its history to date. Within 24 hours, leveraged positions worth over $19 billion were forcibly liquidated, leading to a decline in the total market capitalization of the crypto market of around $400 to $500 billion. This event was accompanied by significant price distortions. The price of Bitcoin fell by more than 14 percent, Ethereum recorded a decline of around 12 percent, while numerous altcoins suffered price losses of between 40 and 70 percent. The extent of these market movements highlights the continuing underdeveloped market structure of this still young market, particularly in the interplay of high leverage, lack of transparency, and lack of regulatory safeguards.
The final vote on the Digital Asset Market CLARITY Act in the US Senate is still pending. Compared to the EU-wide Markets in Crypto Assets Regulation (MiCA), which has already come into force and provides a uniform and comprehensive set of rules for all 27 EU member states, experts consider the CLARITY Act to be more flexible and innovation-oriented. Market analysts believe that, if passed, the law could act as a significant catalyst for the further development of the crypto market. Among others, crypto asset manager Bitwise argues that the regulatory clarity created by the act is likely to have a positive impact on institutional market participation, liquidity, and long-term capital allocation
