The CLARITY Act on cryptocurrency market structure has made a significant advance in the U.S. House of Representatives, but still faces considerable challenges. Although it was passed by the House Agriculture Committee with a vote of 47-6, the bill has encountered significant opposition from the Democratic Party in the House Financial Services Committee.
This bill aims to create a legal framework in the United States, regulating most cryptocurrencies under the authority of #CFTC instead of the SEC. This would provide a "lighter" approach to regulating the market. However, issuers can still choose to register with the SEC if they want special privileges, such as selling directly to institutional investors.
Although Subcommittee Chairman Bryan Steil (Republican) is optimistic about the chances of bipartisan passage, history shows that the Financial Services Committee tends to be more challenging for crypto bills. This difference is attributed to a greater consensus on the role of the CFTC in regulating the crypto spot market, while the role of the SEC is more complex.
Democratic members of the Financial Services Committee have strongly opposed the bill, arguing that it could create a "highway to corruption" and allow individuals like President Donald Trump to benefit from crypto projects while in office. Representative Sam Liccardo (Democrat) even questioned the exemption of DeFi protocols from regulation, expressing concern that projects could exploit the "DeFi" label to evade oversight.
In response, Chairman Steil affirmed that the #CLARITYAct Act will consider the "fundamental function" of a project rather than its label. This bill is expected to face many amendments from the Democratic Party and could extend late into the night before the final vote takes place.