The CLARITY Act (H.R. 3633) Explained: How It Would Split SEC and CFTC Jurisdiction

By Chanté Eliaszadeh | Updated June 2026

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 mid-2026, with the House and Senate texts unreconciled.¹
• There is no named Bitcoin/Ether carve-out. Classification runs through a generic “mature blockchain” test, not a list of specific coins.²
• 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.²
• 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.²

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).¹
• September 18, 2025 --- the bill was received in the Senate, read twice, and referred to the Committee on Banking, Housing, and Urban Affairs.¹
• 2026 --- the Senate Banking Committee developed its own market-structure text, advanced a measure out of committee in mid-2026, and placed a revised Senate version on the legislative calendar for floor consideration.¹

The bottom line on status: the House has passed a bill; the Senate has not, 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: the SEC treats most tokens as securities under the 1946 Howey test,³ while the CFTC’s commodity authority has historically reached derivatives but not spot trading --- leaving spot crypto markets in a federal gap. 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.)²

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.² 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.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.²

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.⁴ 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.²

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.”²

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.³
• 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.²
• 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. The SEC and CFTC have separately pursued administrative approaches to crypto classification and coordination during 2025 and 2026, and the agencies’ own guidance may shape --- or partly pre-empt --- the questions the CLARITY Act addresses, depending on what is finalized first and what survives legal challenge. 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, and that neither is final today. (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.³
• 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 any version of the maturity test, control and ownership concentration are what count.²
• 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.
• 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 plus active Senate work give it real momentum. But momentum is not enactment, 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
• Digital Assets & Blockchain Legal Services --- Comprehensive crypto legal counsel
• Contact Us --- Discuss your compliance needs

---

Footnotes

1. 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 mid-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 ↩⁷

2. 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

3. SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (investment-contract test). PDF ↩ ↩² ↩³

4. 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. ↩