The Clarity Act: 6 Changes for the crypto - how will the market be regulated?

Why is everyone waiting for the Clarity Act to pass? Because it will remove regulatory barriers, allowing pension funds, insurance companies, and banks to pour trillions of dollars into the crypto market. The law also covers the tokenization of real-world assets (RWA), DeFi, and exchanges.

Let's break down what this law is and how it could affect BTC, altcoins, stablecoins, and the entire crypto niche. And what it all means for your crypto portfolios.

What is the Clarity Act?

The Clarity Act (Digital Asset Market Clarity Act) is the first comprehensive set of rules for the crypto industry in the United States, designed to end years of uncertainty in digital asset regulation.

The goal of the law is to put an end to the confusion, create clear rules so crypto companies know how to operate, investors are protected, and the US doesn't fall behind countries where crypto laws already exist.

The essence is that the law seeks to delineate cryptocurrency regulation by assigning them the status of either a commodity or a security. Accordingly, two agencies regulate commodities and securities – the SEC and the CFTC.

However, there is a colossal difference between the SEC and the CFTC regulators.

The Battle of Two Regulators: SEC and CFTC

The Clarity Act aims to divide authority between the two US regulators:

1.   SEC (Securities and Exchange Commission)
2.   and CFTC (Commodity Futures Trading Commission)

It is crucial to understand the differences between the SEC and the CFTC:

• The SEC is known for its strictness towards cryptocurrencies. The regulator demands full disclosure about founders, tokenomics, and navigating complex legal procedures. All of this leads to enormous legal expenses.
• The CFTC, in turn, is known for its lenient approach. This regulator doesn't harass crypto companies with inspections and bureaucracy. The CFTC's role is to oversee markets to prevent manipulation and "pump and dump" schemes.

However, the lenient CFTC only assumes oversight when the blockchain system is deemed mature and decentralized. Other altcoins risk facing the regulatory nightmare of the SEC. However, new crypto projects are granted a period of up to 3-4 years to achieve decentralization and maturity, during which they can develop without strict SEC oversight.

Why Does the Clarity Act Introduce a Network Maturity Test?

According to the Clarity Act, a blockchain network is considered mature if no single entity controls more than 20% of the voting power or tokens in circulation, the source code is open, and the token has functional utility.

Simply put, the maturity test is needed to objectively distinguish whether a crypto project qualifies as a commodity (under the lenient CFTC regulator) or a security (under the SEC regulator).

If an altcoin is deemed a security, meaning it lacks decentralization and the token has identifiable beneficiaries (the team), it could be strangled by SEC regulation and legal action.

Examples are as follows:

• Deemed commodities: BTC, ETH, XRP, SOL, LTC, Doge, Hbar, Chainlink.
• Starknet, for example, might fail the test because 70% of all coins are concentrated in the top 10 wallets.

A scenario is possible where up to 90% of all existing altcoins cannot prove their decentralization and would be classified as securities. This could lead to their delisting from American exchanges.

Where investors clearly expect profit solely from the efforts of a centralized development team, the SEC seeks to regulate it.

The law also provides a concession: any cryptocurrencies for which spot ETFs were launched before January 1, 2026 (including BTC, ETH, XRP, SOL) are automatically recognized as digital commodities.

However, one of the most contentious points is the ban on paying passive income to users simply for holding stablecoins. Banks want to prevent deposit outflows.

Why Are Banks Blocking the Law?

Banks risk deposit outflows of up to $6.6 trillion due to stablecoins offering 4–5% yields versus their 0.1%, and the law's Section 404 could ban crypto yield payments due to banking lobby pressure.

Traditional banks aren't against cryptocurrencies per se; they are against you earning yield. Their goal is to wait for the law to pass so they can offer the same products themselves but take a 3.5% margin for themselves.

Banks fear they cannot compete, lose deposits, and lose money. According to estimates cited by the ABA bank association, up to $6.6 trillion (about 35% of the total US bank deposit base) could move to the blockchain if stablecoins offer 4-5% yields compared to bank rates of 0.1%. Crypto companies, conversely, believe that yield is the very point of stablecoins.

Interestingly, while the US attempts to ban yield on stablecoins, China started paying interest on its digital yuan (e-CNY) on January 1, 2026, creating an incentive for capital outflow from the dollar zone.

But banks aren't the only ones opposing the law. Disagreements exist in other areas too.

Who Is Hindering the Law's Passage? Disagreements

A bad law is worse than no law. Cardano founder Charles Hoskinson's position is that the current version of the Clarity Act strips developers of protection and makes all assets securities by default. This would kill innovation more than the current ambiguity of the law.

Coinbase exchange is also against the Clarity Act. It appears that the only reason Coinbase is blocking the law is their own profit. They are protecting not user freedom, but their 20% revenue derived from stablecoins.

Coinbase CEO Brian Armstrong called this provision a "switch for rewards" that would allow banks to eliminate competition from crypto.

The US Congress is also unable to reach an agreement. The partisan divide in Congress over the Clarity Act is intensifying ahead of the midterm elections. Democrats (Warren, Waters) criticize the bill as Trump's project (World Liberty Financial), and M. Waters called it the "Calamity Act," accusing it of weakening investor protections.

Passage by Summer 2026 or Freeze Until 2029?

The actual time for a vote in the Senate is extremely limited. Congress has only about 3 working months to pass the Clarity Act; otherwise, it could be frozen until 2027 or even 2029.

It's important to understand that even if the law is signed by Trump, the rulemaking process will take another 270+ days. If power changes in the US during that time, new regulators could interpret the law as harshly as crypto adversary Gary Gensler did.

Below is a brief timeline of attempts to pass the Clarity Act and the Genius Act (stablecoins):

It is important to understand that the temporary clarification by the SEC and CFTC from March 17 regarding the status of Bitcoin, Ethereum, and other assets as digital commodities has no legal force and can be revoked. Moreover, the absence of a crypto czar in the White House - the position held by David Sacks, for which no replacement will be appointed after his departure on March 26, 2026 - weakens the industrys position in negotiations over the Clarity Act.

The crypto market believes the Clarity Act will still pass. Polymarket, a prediction platform where people make forecasts with real money, estimates the probability of the Clarity Act passing in 2026 at 72%, up from 62% a week ago.

The midterm elections in November 2026 also create pressure for the law's passage.

Optimistic Scenario (Passage by Summer 2026)

Industry leaders, including Brad Garlinghouse (Ripple), predict the law will pass by the end of May 2026. This is possible if banks and crypto companies (Coinbase) reach a compromise on Section 404 – the ban on stablecoin yields.

Pessimistic Scenario (Freeze until 2029–2030)

If the bill does not pass the Senate by June (Memorial Day holiday), its chances of passing in 2026 drop sharply.

Charles Hoskinson and other analysts warn: if Democrats (led by Elizabeth Warren and Maxine Waters) regain control of the House in November, they will block the bill as a Trump product.

The next opportunity would only come in 2029 or 2030. Maxine Waters has already called the current version the "Calamity Act," deeming it a threat to investors.

Why Is Trump Fighting for the Passage of the Clarity Act?

The Trump administration has set a goal to make the US the crypto capital of the world. Trump is personally pressuring banks on social media, accusing them of holding the Clarity Act hostage. He also has a personal interest: his family project, World Liberty Financial, and the USD1 stablecoin stand to directly benefit from the new legislation.

Trump unprecedentedly spoke out against banks on the Truth Social network.

Trump stated:

"Banks are making record profits, and we will not let them undermine our powerful crypto agenda. Banks should not try to undermine the Genius Act or hold the Clarity Act hostage."

This is no longer just politics: Trump has personal scores and financial interests:

1. First, in 2021, JP Morgan closed his accounts without warning, and Trump is now suing the bank.
2. Second, his project World Liberty Financial launched the USD1 stablecoin, whose market capitalization reached $5 billion, and his family receives 75% of the revenue. Banks that blocked him now threaten this business. For Trump, this fight has become 100% personal and financial.

What Does the Clarity Act Mean for Your Money?

Cryptocurrencies are about to become a fully regulated asset class, like stocks. JPMorgan forecasts that the Clarity Act will attract pension funds, insurance companies, and institutional investors to the market who have stayed on the sidelines until now.

US citizens are beginning to understand they could earn 4-5% annually on stablecoins instead of a paltry 0.1% in a bank.

This is the essence of the confrontation between banks and cryptocurrencies. Trump is openly fighting for cryptocurrencies – this has never happened before. Whether you like Trump or not, a sitting president telling banks not to block crypto legislation is unprecedented. This is a generational shift, 100%.

The story isn't over – the Senate vote hasn't happened yet, the battle with banks continues, and its outcome will affect everyone who already holds or is thinking of buying cryptocurrency.

What Are the Global Implications of Passing the Clarity Act?

Passing the Clarity Act is not just a legal amendment; it's a fundamental shift. It transitions the crypto market from the Wild West era to a state of mature financial technology.

Blockchain ceases to be an experiment or a developer's pastime. For Wall Street, it transforms into a full-fledged payment and settlement rail. This primarily concerns the Ethereum network.

BlackRock has already created the necessary infrastructure in the form of ETFs. Now funds can use these tools without fearing that the rules will change retroactively.

How could the market change?

• Expect mass tokenization of stocks (RWA), treasury bonds, and real estate. Markets will become more liquid and accessible.
• DeFi projects like Uniswap or Aave, operating through immutable smart contracts without access to client funds, will move into the white zone and face minimal regulation.
• Banks will be able to use DeFi protocols to generate yield on their tokenized deposits.
• Exchanges will be required to keep user funds separate from operational money. This will enhance account protection to the level of bank accounts.

Ultimately, the US will cement its status as the global capital of crypto innovation, preventing developer brain drain. For the first time at the federal level, investor rights and the right to self-custody of assets on exchanges will be protected.

Summary

The Clarity Act introduces 6 important changes for the crypto industry:

1. Crypto assets are divided into 3 categories:

• Digital commodities (BTC, Ethereum) – under the oversight of the lenient CFTC.
• Securities – under SEC oversight.
• Stablecoins – a separate category under the Genius Act, focused on settlements.

2. The CFTC regulator gains control over spot markets for digital commodities. Exchanges, brokers, and dealers register only with the CFTC, eliminating SEC claims of total control.
3. If a network is objectively decentralized, tokens automatically cease to be considered securities and become commodities.
4. All intermediaries must register, segregate client funds, use qualified custodians, and disclose risks – to prevent a repeat of the FTX collapse.
5. RWA (Real World Assets) is permitted. This involves transitioning traditional securities infrastructure into an on-chain format with legal use of blockchain registries.
6. A unified federal regulatory system is created instead of disparate state laws: platforms register once and can serve the entire country.

What if the Clarity Act passes? This would be a huge positive for crypto: transparency, fewer lawsuits, more big money inflows, price appreciation, possibly an altseason. Especially for coins in the grey zone like XRP, Hype, and ADA. Regarding altcoins that would benefit from the Act's passage, attention should be paid to projects with clear use cases, proven market demand, and real utility. Decentralization becomes an objective necessity, not just a marketing slogan.

What if the Clarity Act does not pass?

If the law does not pass, everything remains as is. Lawsuits will continue to stifle some projects, many coins will remain in limbo, and growth will slow.

Ultimately, the fierce political, legal, and economic battle surrounding the Genius and Clarity Acts is a fundamental existential struggle for absolute control over the basic architecture of global money.

The debate over whether stablecoins should behave like bank deposits has already caused several delays in the bill's passage, and there remains a real possibility it will be weakened or postponed again. Whether this legislation becomes the most positive regulatory shift in crypto history or a slow strangulation of some of crypto's main advantages remains to be seen. But one thing remains clear: the Wild West era of cryptocurrencies is coming to an end.

What's next? On one hand, achieving regulatory maturity should pave the way for a project to be categorized as a commodity. On the other hand, the industry's bitter experience shows that the best technology doesn't always win. Projects with better marketing and government connections win.

Share this overview with friends if you want them to understand the Clarity Act, which could reshape the market.

Maxim Anisimov, specifically for bytwork.com.

Disclaimer: this is not financial advice; always conduct your own research.