Crypto Rules: Who's in Charge?

The U.S. is working to determine who should oversee the crypto market. The Digital Asset Market Clarity Act of 2025, or CLARITY Act, is progressing through Congress. This act aims to resolve the confusion surrounding crypto regulation.

Key Provisions of the CLARITY Act

1. Decentralized Finance (DeFi) Exemptions
   • The act proposes that certain DeFi activities should not be regulated like traditional financial services.
   • This includes operating nodes, wallets, and liquidity pools.
   • The goal is to prevent regulators from treating software infrastructure like a market exchange.

2. Digital Commodities as Covered Securities
   • The act seeks to classify "digital commodities" as "covered securities."
   • This would establish federal oversight over state regulations, creating a uniform market.
   • However, it may weaken state regulators' ability to protect consumers from scams.

Balancing Innovation and Protection

• The act aims to promote innovation while protecting investors.
• Concerns remain:
• The DeFi carve-out may be too broad, allowing sophisticated operators to avoid regulation.
• The preemption clause could reduce state regulators' authority.

Next Steps

• The act is still under debate.
• Senators will decide in January whether to:
• Tighten definitions
• Narrow safe harbors
• Modify the reach of preemption
• The act's success depends on maintaining bipartisan support to finalize the legislation.