“The bill is widely misdescribed online, misnamed and credited with provisions it does not contain. H.R. 3633 passed the House 294-134 on July 17, 2025 and remains unenacted. There is no named Bitcoin or Ether carve-out: classification runs through a generic mature-blockchain test that turns on control, satisfied when no person or group controls the chain and insiders hold less than 20 percent.”
For years, crypto companies have operated in regulatory purgatory, unable to answer the industry’s most basic question: is my token a security or a commodity? The CLARITY Act is Congress’s most serious attempt yet to answer it. But the bill is widely misdescribed online—misnamed, and credited with provisions it does not contain—so it is worth being precise about what the actual legislation says. This article anchors to the real bill: H.R. 3633, the Digital Asset Market Clarity Act of 2025, which the House passed in July 2025 and which is now pending in the Senate. Below: where it stands, how it would divide SEC and CFTC authority, the “mature blockchain” test that does the real work, the deadlines it actually sets, and what companies should—and should not—do while it moves.
Key Takeaways
- It is a real, identifiable bill—and it is not law. H.R. 3633 passed the House 294-134 on July 17, 2025, was referred to the Senate Banking Committee, and remains unenacted as of October 2026: the Senate Banking Committee reported a substitute on June 1, 2026, and on September 15, 2026 a Senate cloture vote to begin consideration failed 49-50.123
- There is no named Bitcoin/Ether carve-out. Classification runs through a generic “mature blockchain” test, not a list of specific coins.4 (The agencies’ March 2026 interpretation does name examples of digital commodities, Bitcoin and Ether among them, but that is agency interpretation, not the bill.)5
- The CFTC would gain spot-market authority over digital commodities. This is the bill’s central jurisdictional move—exclusive CFTC authority over digital-commodity transactions, including spot or cash markets.1
- The maturity test turns on control, not a multi-factor “DeFi test.” A blockchain is “mature” when, among other things, no person or group controls it and insiders hold less than 20 percent—a single composite definition, not the three-factor framework sometimes attributed to the bill.4
- The real deadlines are modest and specific. Roughly a 270-day SEC rulemaking window, a 20-day listing-certification window, and a four-year CFTC fee sunset—not the 18-month/180-day/60-day figures that circulate in secondary summaries.4
Where the Bill Actually Stands
Precision starts with the name and status, because much of the confusion online begins there. The CLARITY Act is H.R. 3633, the Digital Asset Market Clarity Act of 2025, introduced May 29, 2025 by House Financial Services Committee Chairman French Hill. It is not a “discussion draft” and it is not titled the “Crypto-Asset Market Structure and Investor Protection Act”—a name that does not correspond to any bill in the 119th Congress.1
The legislative history to date:
- July 17, 2025—the House passed H.R. 3633 by a vote of 294-134, during the stretch the press dubbed “Crypto Week” (the same week the GENIUS Act was enacted).16
- September 18, 2025—the bill was received in the Senate, read twice, and referred to the Committee on Banking, Housing, and Urban Affairs.1
- February 2, 2026—the Senate Agriculture Committee reported its own market-structure bill, S. 3755, the Digital Commodity Intermediaries Act, which gives the CFTC exclusive jurisdiction over digital-commodity transactions, including in cash or spot markets, conducted on or subject to the rules of a CFTC-registered entity or by an entity registered, or required to be registered, with the CFTC.2
- June 1, 2026—the Senate Banking Committee reported H.R. 3633 with an amendment in the nature of a substitute, placing it on the Senate legislative calendar.2
- September 15, 2026—Majority Leader Thune having moved on August 7 to proceed to the bill, cloture on that motion failed 49-50, short of the three-fifths required, so the Senate did not take up the bill. Senator Tillis entered a motion to reconsider the vote.23
The bottom line on status: the House has passed a bill; the Senate has not agreed to take it up, and the two chambers’ market-structure texts are not yet reconciled. Until that happens and a single bill is enacted and signed, the CLARITY Act is pending legislation—a strong signal of congressional direction, but not law you can rely on today.
How H.R. 3633 Would Split Jurisdiction
The current landscape is genuinely a maze. Since March 2026 an SEC interpretation, which the CFTC has said it will administer the Commodity Exchange Act consistently with, treats “[d]igital commodities, digital collectibles, and digital tools” as “not themselves securities,” while recognizing that such an asset “can be offered and sold subject to an investment contract, which is a security” under the 1946 Howey test.57 The CFTC’s commodity authority has historically reached derivatives but not most spot trading; in December 2025 the CFTC announced that listed spot crypto products would begin trading on CFTC-registered futures exchanges, but no statute gives spot crypto markets a general federal regime.8 H.R. 3633 addresses that gap directly.
Digital Asset Securities (SEC)
The bill leaves with the SEC the assets that look like traditional securities: tokens sold as investment contracts (the Howey line—profits expected from the efforts of others), tokens carrying equity-like rights (governance or revenue claims resembling stock), and tokens functioning as debt instruments. Where an issuer retains meaningful ongoing responsibility for the enterprise, the investment-contract analysis continues to pull toward SEC jurisdiction. The animating idea is unchanged from existing law: if buyers reasonably expect profit from a central party’s efforts, you are likely dealing with a security. (The neat four-bucket taxonomy that circulates in summaries is a useful gloss, but it is commentary, not statutory text.)4
Digital Commodities (CFTC)
The bill’s signature move is on the commodity side. It would give the CFTC exclusive regulatory jurisdiction over transactions in digital commodities—including in spot or cash markets—for the first time.1 That is a real expansion: spot digital-commodity exchanges would have a federal registration path with the CFTC rather than operating only under a patchwork of state regimes.
What makes a token a “digital commodity” is the part most often gotten wrong. There is no explicit Bitcoin-and-Ether carve-out in the bill.4 Instead, a token becomes a digital commodity when its blockchain is “mature.”
The “Mature Blockchain” Test
This is the hinge of the whole statute, and it is a single composite definition, not a multi-prong “DeFi test.” Under H.R. 3633, a blockchain system is treated as mature—moving the associated token from the securities regime toward digital-commodity treatment—when, in broad terms: the value of the token is derived substantially from the use of the blockchain rather than from a promoter’s efforts; no person or group has unilateral control over the system; no person holds special operational privileges; and insiders (the issuer and affiliated persons) hold less than 20 percent of the token’s supply or control.4 That test is the House-passed text. The Senate Banking Committee’s substitute drops it and classifies tokens through “network token” and “ancillary asset” definitions instead, an ancillary asset being a network token “the value of which is dependent upon the entrepreneurial or managerial efforts of an ancillary asset originator or a related person.” How the two approaches would be reconciled is unresolved.2
That last element—a roughly 20-percent insider-control ceiling—is the closest thing the bill has to a bright line, and it is the number that actually matters. Notably, the Congressional Research Service frames maturity through this “common control” formulation rather than the separate, multi-factor “decentralization” test that some commentators describe; the maturity definition is what governs.4
The mechanism echoes former SEC official William Hinman’s 2018 observation that a sufficiently decentralized network (his example was Ethereum) may no longer present an investment contract.9 That analogy is fair. The invented “three-factor DeFi test”—no unilateral control, immutable/community-governed code, and “meaningful decentralization” as separate statutory prongs—is not in the bill. The useful, accurate question for a protocol is the maturity question: who controls the system, and how concentrated is insider ownership?
The Deadlines the Bill Actually Sets
A great deal of secondary writing about the CLARITY Act assigns it deadlines it does not contain. To be precise about the real ones: the bill works on roughly a 270-day SEC rulemaking clock for key implementing rules, a 20-day window for listing-certification effectiveness, and a four-year sunset on the CFTC’s provisional-registration fee structure.4
Just as important is what is not in the bill: there is no 18-month decentralization “transition period,” no 180-day mandatory SEC-CFTC joint-guidance requirement, and no 60-day no-action-letter mandate. The CRS overview specifically notes the bill does not require mandatory joint SEC-CFTC rulemakings. A primary-market exemption does exist for qualifying mature-blockchain digital-commodity offerings—capped at $75 million over a 12-month period—but that is a different provision from the “$50 million secondary-trading exemption” that appears in some summaries, and there is no “Form D-Plus.”4
If you take one thing from this section: verify any specific CLARITY Act figure against the bill text or the CRS overview before relying on it. The most-repeated numbers are the most likely to be wrong.
A Practical Decision Path
While the bill is pending, the analysis that matters is still grounded in current law—but the CLARITY framework is a useful lens for where things are heading. As a preliminary self-assessment:
- Did you raise funds selling tokens on the promise that your team would build value? That points toward an investment contract and SEC jurisdiction under Howey today, and under the bill’s securities side tomorrow.7
- Does the token carry equity- or debt-like rights—governance resembling shareholding, revenue claims, or repayment obligations? That points to the securities side.
- Who controls the system, and how concentrated is insider ownership? If a team holds admin keys, can unilaterally change the protocol, or (with affiliates) holds a large share of supply, the blockchain is not “mature” and commodity treatment is unlikely. If control is genuinely distributed and insiders hold under ~20 percent, the maturity test—and CFTC digital-commodity treatment—comes into view.4
- Still uncertain? That is the common and honest answer for assets near the line. Document the analysis with counsel rather than asserting a conclusion the facts do not support.
A note on “DeFi theater”: the maturity test rewards real distribution of control, not labels. A centralized protocol that markets itself as decentralized while retaining upgrade authority and concentrated ownership does not become a commodity by saying so—and overstating decentralization carries its own legal risk.
The Parallel Track: Agency Action
Congress is not the only actor, and the agencies have moved further than the bill. The SEC’s March 2026 interpretation sorting crypto assets into five categories is final and took effect March 23, 2026, superseding the staff’s 2019 framework.5 On August 18, 2026 the SEC proposed Regulation Crypto Assets, two Securities Act exemptions (up to $5 million over four years, and up to $75 million in each 12-month period) and a conditional safe harbor from the “investment contract” definition, with comments due October 20, 2026.10 On the CFTC side, Chairman Michael Selig said on August 20, 2026 that “[i]f CLARITY continues to stall,” the agency “will utilize its existing authorities to begin establishing a regime for crypto asset markets,” and a CFTC pre-rule, “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets,” is pending White House regulatory review.11 The interaction between a final statute and the agencies’ rulemaking is itself unsettled. For companies, the practical implication is that the regulatory picture will be set by both tracks: the interpretation is in force, and the rulemakings and the statute are not. (For the agency-side classification framework, see the related resources below.)
What Companies Should Do Now
The right posture is to prepare without over-committing to provisions that may not survive reconciliation:
- Run a jurisdictional self-assessment under current law. Apply Howey and existing SEC/CFTC authority to your token as it exists today, and document it with counsel.7
- Build a credible decentralization record. If you are centralized now, develop a real plan to distribute control and reduce insider concentration—and keep evidence of it. Under either chamber’s approach, control and dependence on the team’s efforts are what count.42
- Audit your messaging. Promotional materials that promise profit from your team’s efforts pull toward security classification; emphasize genuine utility and governance only where it is real.
- Engage the legislative and rulemaking process. Comment letters and trade-association coordination are how the final text and rules get shaped—the time to influence them is before they are final. Comments on the SEC’s Regulation Crypto Assets are due October 20, 2026.10
- Do not restructure around unenacted specifics. Treat the bill’s provisions as direction, not as compliance obligations, until a single reconciled bill is law.
Looking Ahead
The CLARITY Act is the most serious congressional effort yet to resolve crypto’s jurisdictional problem, and House passage and a Senate Banking substitute brought it to the Senate floor. But the September 15, 2026 cloture vote failed 49-50, the Senate text differs from the House’s, and the bill will likely change before any of it becomes law. The honest message for crypto companies is twofold: the era of treating regulatory ambiguity as a business strategy is closing, and the smart move is to prepare under current law while tracking—not pre-empting—a bill that is still being written.
Need Regulatory Strategy Guidance?
Astraea Counsel helps crypto companies navigate SEC and CFTC compliance, including registration, disclosure obligations, and regulatory-risk assessment. Explore our Regulatory Compliance services.
Related Resources
- The SEC/CFTC Token Taxonomy: What the Categories Mean for Your Token—The agency-side classification framework
- The SEC’s Crypto Pivot: What It Means for Your Startup—Recent SEC enforcement-policy changes
- GENIUS Act Stablecoin Compliance Roadmap—The enacted federal payment-stablecoin framework
- Can You Sue a Prediction Market? Trader Remedies When Event Contracts Settle Wrong—CEA preemption and trader remedies in event-contract settlement disputes
- Digital Assets & Blockchain Legal Services—Comprehensive crypto legal counsel
- Contact Us—Discuss your compliance needs
- Cryptocurrency Lawyer in California—engaging counsel on licensing, token launches, custody, and enforcement
Footnotes
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H.R. 3633, Digital Asset Market Clarity Act of 2025, 119th Cong. (introduced May 29, 2025, by Rep. French Hill). The House passed the bill 294-134 on July 17, 2025; it was received in the Senate, read twice, and referred to the Committee on Banking, Housing, and Urban Affairs on September 18, 2025; the Senate Banking Committee subsequently developed and advanced its own market-structure text and placed a revised version on the Senate legislative calendar in 2026. The bill grants the CFTC “exclusive regulatory jurisdiction over … transactions in digital commodities,” including spot or cash markets. As of October 1, 2026 the bill is not enacted and the House and Senate texts remain unreconciled. Congress.gov, H.R. 3633 (119th Cong.), https://www.congress.gov/bill/119th-congress/house-bill/3633; all-actions, https://www.congress.gov/bill/119th-congress/house-bill/3633/all-actions. ↩ ↩2 ↩3 ↩4 ↩5 ↩6
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Library of Congress, Bill Status XML, H.R. 3633, 119th Cong. (“2026-05-14 … Ordered to be reported with an amendment in the nature of a substitute favorably”; “2026-06-01 … Reported by Senator Scott SC, with an amendment in the nature of a substitute”; “Calendar No. 423”; “2026-09-15 Cloture on the motion to proceed to the measure not invoked in Senate by Yea-Nay Vote. 49 - 50. Record Vote Number: 234”; “Motion by Senator Tillis to reconsider the vote … entered in Senate”), https://www.govinfo.gov/bulkdata/BILLSTATUS/119/hr/BILLSTATUS-119hr3633.xml; H.R. 3633, Reported in Senate (BILLS-119hr3633rs) (substitute text, “ancillary asset” and “network token” definitions), https://www.govinfo.gov/content/pkg/BILLS-119hr3633rs/pdf/BILLS-119hr3633rs.pdf; S. 3755, Digital Commodity Intermediaries Act, 119th Cong., Reported in Senate Feb. 2, 2026 (Calendar No. 312), § 201 (exclusive CFTC jurisdiction over digital-commodity transactions “including in a digital commodity cash or spot market”), https://www.govinfo.gov/content/pkg/BILLS-119s3755rs/pdf/BILLS-119s3755rs.pdf. ↩ ↩2 ↩3 ↩4 ↩5 ↩6
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172 Cong. Rec. S4557 (daily ed. Aug. 7, 2026) (“Mr. THUNE. Madam President, I move to proceed to Calendar No. 423, H.R. 3633.”), https://www.govinfo.gov/content/pkg/CREC-2026-08-07/pdf/CREC-2026-08-07-senate.pdf; 172 Cong. Rec. S4706 (daily ed. Sept. 15, 2026) (Rollcall Vote No. 234: “yeas 49, nays 50”; “Three-fifths of the Senators having been duly chosen and sworn not having voted in the affirmative, the motion is rejected”), https://www.govinfo.gov/content/pkg/CREC-2026-09-15/html/CREC-2026-09-15-pt1-PgS4706-2.htm. ↩ ↩2
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Congressional Research Service, “Crypto Legislation: An Overview of H.R. 3633, the CLARITY Act,” IN12583, https://www.congress.gov/crs-product/IN12583. The CRS overview describes the bill’s “mature blockchain” definition (value derived substantially from blockchain use; no person or group with unilateral control; no special privileges; insiders holding less than 20 percent), frames maturity through that “common control” formulation rather than a separate multi-factor decentralization test, and notes the bill does not mandate joint SEC-CFTC rulemakings; it identifies the bill’s real timelines (including an approximately 270-day SEC rulemaking window, a 20-day listing-certification window, and a four-year provisional-registration fee sunset) and a primary-market exemption for qualifying mature-blockchain digital-commodity offerings capped at $75 million over a 12-month period. The bill contains no named Bitcoin/Ether carve-out, no “Form D-Plus,” no $50 million secondary-trading exemption, and no 18-month transition, 180-day joint-guidance, or 60-day no-action mandates. ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9 ↩10 ↩11
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Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Securities Act Release No. 33-11412, Exchange Act Release No. 34-105020, 91 Fed. Reg. 13714, 13716—18 (Mar. 23, 2026) (effective Mar. 23, 2026; five categories; examples of digital commodities including Bitcoin (BTC) and Ether (ETH); CFTC guidance that it will administer the Commodity Exchange Act consistent with the interpretation; superseding the staff’s 2019 “Investment Contract” framework), https://www.govinfo.gov/content/pkg/FR-2026-03-23/pdf/2026-05635.pdf. ↩ ↩2 ↩3
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For the bill text as passed by the House, see H.R. 3633, Engrossed in House (BILLS-119hr3633eh), https://www.congress.gov/119/bills/hr3633/BILLS-119hr3633eh.pdf; and Senate Banking Committee, “Myth vs. Fact: The CLARITY Act,” https://www.banking.senate.gov/newsroom/majority/myth-vs-fact-the-clarity-act. ↩
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SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (investment-contract test). PDF ↩ ↩2 ↩3
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Press Release No. 9145-25, Commodity Futures Trading Comm’n, Acting Chairman Pham Announces First-Ever Listed Spot Crypto Trading on U.S. Regulated Exchanges (Dec. 4, 2025), https://www.cftc.gov/PressRoom/PressReleases/9145-25. ↩
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William Hinman, Director, SEC Division of Corporation Finance, “Digital Asset Transactions: When Howey Met Gary (Plastic),” Remarks at the Yahoo Finance All Markets Summit (June 14, 2018), https://www.sec.gov/news/speech/speech-hinman-061418. ↩
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Regulation Crypto Assets, Securities Act Release No. 33-11434, Exchange Act Release No. 34-106150, 91 Fed. Reg. 54510 (proposed Aug. 21, 2026) (comments due Oct. 20, 2026), https://www.govinfo.gov/content/pkg/FR-2026-08-21/pdf/2026-17183.pdf. ↩ ↩2
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Michael S. Selig, Chairman, Commodity Futures Trading Comm’n, Remarks at Innovation Advisory Committee Conference (Aug. 20, 2026), https://www.cftc.gov/PressRoom/SpeechesTestimony/opaselig10; Office of Info. & Regulatory Affairs, Executive Order Submissions Under Review (RIN 3038-AF80, “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets,” prerule, pending review, read Oct. 1, 2026), https://www.reginfo.gov/public/do/eoReviewSearch. ↩
