Encryption New Era: How the CLARITY Act Reshapes Digital Asset Regulation

The United States' cryptocurrency regulation is undergoing significant changes. Following the genius legislation of stablecoin regulation becoming law, the CLARITY Act is in the legislative process, aiming to provide a clear framework for the fundamental definitions and regulatory authority of cryptocurrency.

The CLARITY Act focuses on core areas such as public chains, decentralized finance, and token issuance, while clarifying the responsibilities of the Securities and Exchange Commission ( SEC ) and the Commodity Futures Trading Commission ( CFTC ). This Act is closely linked to the FIT21 Act of 2024, together constructing a new encryption regulatory system in the United States.

Reviewing history can help better understand current regulatory trends. After the 2008 financial crisis, Gary Gensler served as the chairman of the CFTC, promoting regulation in the derivatives market. In 2021, he was reappointed as the chairman of the SEC, shifting the regulatory focus to the field of cryptocurrency. Gensler believes that most tokens are illegal securities and has taken a tough stance on high-leverage trading.

However, the regulatory landscape took a turn in 2024. After the SEC partially lost its lawsuit against Ripple, it finally approved a Bitcoin spot ETF. This marked a victory for the encryption industry against traditional regulatory forces to some extent.

In 2025, after the new government takes office, the regulatory attitude further relaxes. The CLARITY Act emerges against this backdrop, aiming to establish a regulatory framework for digital goods, digital assets, and stablecoins. The Act defines stablecoins as payment instruments, digital goods are under the jurisdiction of the CFTC, and digital assets are overseen by the SEC.

The bill clarifies the commodity attributes of tokens on decentralized public chains like Ethereum, while establishing a $7.5 million exemption limit for token issuance. Furthermore, if the issued tokens achieve decentralization within four years, they can be exempt from penalties.

The CLARITY Act also recognizes the concept of digital goods for the first time, stating that they are not considered securities as long as they have practical value for the operation of public chains, decentralized finance, or DAO protocols. However, NFTs are still classified as assets rather than goods.

The bill distinguishes between the process of token issuance and its operation. For example, the Initial Token Offering (IXO) is considered a securities offering, but if the issued tokens meet specific conditions, they may not be regarded as securities. Similarly, airdrop points may be considered securities, but airdrop tokens that meet the conditions may not be.

Although the CLARITY Act provides a clearer framework for encryption regulation, there are still some gray areas. For example, the specific operations of decentralized finance still need to be clarified further. As the Tornado Cash case progresses, judicial practices may drive legislative improvements.

Overall, the CLARITY Act represents an important advancement in U.S. encryption regulation, providing clearer guidance for the digital asset market. However, as technology and the market continue to evolve, the regulatory framework also needs to be continuously adjusted and improved.