The CLARITY Act puts an end to the gray regulatory area between the SEC and CFTC

Washington is approaching its most serious effort to date to solve the complex problem of crypto: who is the competent authority to regulate when a token is traded both as a commodity and sold as a security, while operating on software that bears no corporate form. The Digital Asset Market Structure Clarification Act (CLARITY Act) has been passed by the U.S. House of Representatives and is awaiting Senate amendments in January – a decisive step whether this bill will become a long-term legal framework or just another ambitious draft.

The core of the CLARITY Act lies in two provisions. The first is an exemption for DeFi, affirming that decentralized activities that do not act as intermediaries will not be regulated as intermediaries simply because they operate source code, nodes, wallets, interfaces, or liquidity pools. The second is a federal legal precedent clause, stating that “digital commodities” are considered “regulated securities,” aiming to end regulatory overlaps between states.

The bill’s goal is quite clear: to end the jurisdictional dispute between the SEC and CFTC, clarify the boundary between secondary transactions and securities offerings, and open a legal registration pathway for platforms handling crypto liquidity. However, the greatest risk is not in theory but in practice: what constitutes DeFi in an ecosystem full of front-ends, governance keys, and insider influence; and how investor protection will be ensured when state-level regulatory roles are diminished.

For DeFi, the CLARITY Act sends a clear message: infrastructure does not equal exchanges. Translating transactions, operating nodes, publishing protocols, providing wallets, or participating in liquidity pools, by themselves, are not enough to be considered intermediary activities. This is an effort to reverse the traditional approach of regulators, which often target “easily identifiable” entities such as development teams or interface operators.

Nevertheless, this exemption does not apply to anti-fraud and manipulation enforcement. SEC and CFTC can still pursue fraud, even if the target claims to be just “software” or “interface.” This separation helps DeFi avoid registration obligations like traditional exchanges but also opens new disputes: where is the line between a data display interface and a trading venue; or when a liquidity pool is manipulated, who is responsible?

On the other hand, the legal precedent clause of the CLARITY Act aims to create a unified market at the federal level, instead of 50 different state rules. This helps reduce legal uncertainty for exchanges, custodians, and token projects transitioning to decentralized models. However, the cost is a diminished role for state regulators—who are seen as a rapid-response defense line against scams targeting retail investors.

The key of this clause lies in the concept of “digital commodities.” The CLARITY Act attempts to separate the initial investment contract used to sell tokens from the tokens themselves when traded on secondary markets. If this structure is accepted by courts and regulators, the bill will truly create clarity. Conversely, if tokens are still considered securities in all circumstances, the CLARITY Act will only add another contentious boundary.

The Senate amendment session in January is therefore crucial. It is the moment for lawmakers to decide whether to tighten the DeFi definition, narrow the safety zone, add investor protection conditions, or adjust the scope of the legal precedent. At the same time, even if the bill passes, the market will have to wait at least a year for detailed regulations to be issued – a period during which enforcement risks are often highest.

At its core, the CLARITY Act is an effort by the U.S. Congress to replace a decade of reactive measures with a clearer management roadmap: not considering infrastructure as an intermediary, and preventing the market from being fragmented by state laws. Whether this roadmap becomes a guiding principle or opens further legal loopholes will depend on the final amendments in the Senate—and how they are implemented in practice.