The CLARITY Act aims to create a regulatory framework for digital assets in the US, primarily assigning the **CFTC** central regulatory authority over **digital commodities** while preserving some **SEC** authority. Here's a breakdown of key provisions:
* **Defining Digital Commodities:** The bill defines "digital commodity" as a digital asset intrinsically linked to blockchain use, *excluding* securities, derivatives, and stablecoins. A key component is the concept of a "**mature blockchain**" – one not controlled by a single entity and meeting specific criteria.
* **SEC Role & Exemptions:** The bill offers a limited exemption from SEC registration for fundraising involving digital commodities on mature blockchains (capped at $75 million over 12 months), requiring an "offering statement." Issuers on *immature* blockchains face additional reporting requirements. Existing SEC-registered market participants can trade digital commodities with CFTC notification, provided regulations are consistent.
* **CFTC Authority:** The CFTC gains exclusive regulatory jurisdiction over digital commodity transactions, requiring exchanges, brokers, and dealers to register. It establishes "Core Principles" for these exchanges, covering areas like trade monitoring, conflict of interest, and customer asset protection. Exchanges can only list commodities from mature blockchains or those with compliant issuers.
* **Provisional Registration:** A provisional registration process is established for early compliance while the full framework is implemented.
* **Other Provisions:** The bill also addresses:
* **Decentralized Finance (DeFi):** Excludes DeFi activities from direct regulation but retains anti-fraud/manipulation authority.
* **Anti-Money Laundering (AML):** Applies the Bank Secrecy Act to new digital asset intermediaries.
* **Bank Involvement:** Amends the Bank Holding Company Act to allow banks to engage in digital commodity activities.
* **Stablecoins:** Limits agency jurisdiction over payment stablecoins to transactions involving registered entities.
* **Custody:** Creates a qualified digital asset custodian requirement.
In essence, the CLARITY Act seeks to provide regulatory certainty for the digital asset market by clearly defining roles for the SEC and CFTC, focusing on blockchain maturity as a key factor, and establishing a comprehensive regulatory framework for digital commodity trading.
* **Defining Digital Commodities:** The bill defines "digital commodity" as a digital asset intrinsically linked to blockchain use, *excluding* securities, derivatives, and stablecoins. A key component is the concept of a "**mature blockchain**" – one not controlled by a single entity and meeting specific criteria.
* **SEC Role & Exemptions:** The bill offers a limited exemption from SEC registration for fundraising involving digital commodities on mature blockchains (capped at $75 million over 12 months), requiring an "offering statement." Issuers on *immature* blockchains face additional reporting requirements. Existing SEC-registered market participants can trade digital commodities with CFTC notification, provided regulations are consistent.
* **CFTC Authority:** The CFTC gains exclusive regulatory jurisdiction over digital commodity transactions, requiring exchanges, brokers, and dealers to register. It establishes "Core Principles" for these exchanges, covering areas like trade monitoring, conflict of interest, and customer asset protection. Exchanges can only list commodities from mature blockchains or those with compliant issuers.
* **Provisional Registration:** A provisional registration process is established for early compliance while the full framework is implemented.
* **Other Provisions:** The bill also addresses:
* **Decentralized Finance (DeFi):** Excludes DeFi activities from direct regulation but retains anti-fraud/manipulation authority.
* **Anti-Money Laundering (AML):** Applies the Bank Secrecy Act to new digital asset intermediaries.
* **Bank Involvement:** Amends the Bank Holding Company Act to allow banks to engage in digital commodity activities.
* **Stablecoins:** Limits agency jurisdiction over payment stablecoins to transactions involving registered entities.
* **Custody:** Creates a qualified digital asset custodian requirement.
In essence, the CLARITY Act seeks to provide regulatory certainty for the digital asset market by clearly defining roles for the SEC and CFTC, focusing on blockchain maturity as a key factor, and establishing a comprehensive regulatory framework for digital commodity trading.
