House Panel Advances CLARITY Act for Crypto Oversight

The US House Financial Services Committee has officially advanced the CLARITY Act, a bill to enhance oversight and transparency in the digital asset space.

Overview

On June 10 2025, House Financial Services lawmakers voted 32 to 19 to advance the Clarity Act to a full floor vote after the House Agriculture Committee earlier voted 47 to 6 to advance the bill. Short for

“Crypto-Logically Addressing Regulatory Inconsistencies and Transparency for You,”

the CLARITY Act seeks to address the regulatory ambiguity that has long plagued the cryptocurrency industry in the United States. The bill was introduced by Representative French Hill (R-AR), who chairs the Subcommittee on Digital Assets, Financial Technology, and Inclusion. 

It focuses on bridging the gaps between existing regulatory agencies—particularly the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)—while providing market participants with more explicit rules for token classification, reporting requirements, and compliance obligations. Hill emphasised the bill’s importance in maintaining the US as a leader in financial innovation, stating,

“This legislation gives entrepreneurs and innovators the clarity they’ve been demanding and helps protect consumers from bad actors exploiting regulatory uncertainty.”

Key Provisions Aim to Define Jurisdiction and Protect Consumers

At the heart of the CLARITY Act is the classification of digital assets, one of the most contentious issues in crypto regulation. The bill proposes clear criteria to determine whether a digital asset qualifies as a security, commodity, or financial instrument. This determination would involve a multi-agency review process, allowing the SEC and CFTC to collaborate and avoid overlapping enforcement actions. 

Another major provision includes disclosure and registration requirements for crypto issuers and exchanges.  Projects issuing tokens must submit detailed disclosures about their business models, token economics, and risk factors—similar to traditional public offerings. Exchanges facilitating crypto trades must also meet enhanced operational standards, cybersecurity protocols, and investor protection safeguards. 

The bill also outlines safe harbour provisions for developers and startups.  These allow new crypto projects to build and launch under a grace period before being subject to full regulatory scrutiny—provided they meet specific transparency criteria and act in good faith. Supporters argue this provision will help foster innovation without leaving investors vulnerable to fraud.

Consumer protection is a recurring theme throughout the legislation. The bill mandates that all digital asset service providers implement robust Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures according to federal guidelines.

Industry Reactions and the Road Ahead

The advancement of the CLARITY Act has been met with cautious optimism from the crypto industry. Many see it as a step toward creating a more predictable and fair regulatory landscape that can help attract investment and talent to the US while minimising the risk of regulatory arbitrage.

Kristin Smith, CEO of the Blockchain Association, welcomed the move, saying,

“The CLARITY Act represents meaningful progress. We hope this signals a broader willingness in Congress to provide the structure needed for the US to compete globally in digital finance.” 

However, not everyone is entirely on board. 

Some Democratic lawmakers have expressed concerns that the bill could weaken the SEC’s authority and potentially allow bad actors to evade oversight. Rep. Maxine Waters (D-CA), ranking member of the Committee, warned that

“a piecemeal approach to crypto regulation could create loopholes that undermine investor protections.”

The CLARITY Act will now head to the House floor for a full vote. If passed, it would then need to gain support in the Senate, where the appetite for crypto legislation has been mixed. Despite the uncertain legislative path ahead, the bill’s progression signals growing momentum for federal crypto regulation in the US.

As digital assets become more entrenched in global finance, lawmakers on both sides of the aisle increasingly acknowledge the need for clear, consistent rules. Whether the CLARITY Act becomes law or merely shapes the broader debate, its introduction marks a significant moment in the evolution of crypto policy in Washington.