The US Government Opens the Way for Bitcoin and Crypto to Conquer New Heights with the CLARITY Bill

On January 13th, the U.S. Senate Banking Committee released the full text of the Digital Asset Market Clarity Act – or CLARITY – prior to the scheduled discussion and amendment session this week. Spanning 278 pages, the bill is considered a significant milestone that could usher in a new growth cycle for Bitcoin and the entire crypto market. Unlike the previous approach of “picking winners” for individual tokens, CLARITY builds a legal “lane” system, classifying digital assets based on their lifecycle and actual functions. This approach aims to create a comprehensive, clear, and consistent legal framework for the industry. Senator Tim Scott, Chairman of the Senate Banking Committee, affirmed that the bill will provide protection and certainty for investors, ending Washington’s prolonged stagnation in crypto regulation. According to him, CLARITY prioritizes the interests of the people, combats crime, and keeps the future of finance in America. Bridging the SEC and CFTC The core of the draft is establishing a legal bridge between the two largest regulatory agencies in the U.S. financial market: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The bill recognizes that a token can initially resemble a security if sold with promises of profits from the development team, but over time, it can evolve into a “commodity” network asset when sufficiently decentralized. To operate this mechanism, CLARITY introduces the concept of “ancillary assets” (ancillary asset) – tokens still dependent on the efforts of the issuer for management or operation. For this group, the SEC will primarily be responsible for transparency, fraud prevention, and fundraising oversight, similar to the model of public companies. When a token qualifies as a “digital commodity,” the management of trading markets and intermediaries will shift to the CFTC. In other words, the SEC will oversee the “promotion and fundraising” phase, while the CFTC will manage trading and market operation phases. Fast Track for ETFs and Bitcoin One notable point is the priority given to assets already listed as ETF products traded on U.S. stock exchanges before January 1, 2026. These tokens will not be classified as “ancillary assets,” thereby automatically recognized as digital commodities. This means Bitcoin and Ethereum – the two assets with existing ETFs – are almost certain to benefit from a “fast lane” legally. Additionally, if other ETFs are approved, tokens like XRP, Solana, Litecoin, Dogecoin, Chainlink, or Hedera could also be grouped with BTC and ETH. Matt Hougan, Chief Investment Officer of Bitwise, likened CLARITY to “Punxsutawney Phil’s groundhog” of the crypto winter, implying that if the bill is signed into law, the market could soon enter a “spring” and reach new heights. Unlocking Ethereum Staking The draft also addresses the long-standing concern that staking rewards could be considered securities income. CLARITY defines staking rewards as “free distributions” and establishes a legal presumption that they are not automatically considered securities offerings. The bill covers various forms of staking, from self-staking, non-custodial staking via third parties, to liquid staking models. This creates a safe legal corridor for the Ethereum ecosystem, which has faced significant pressure from SEC lawsuits in the past. Stablecoins and Yield Competition Regarding stablecoins, CLARITY sets very clear boundaries. Payment stablecoins like USDC must be fully backed, redeemable at par, and not pay interest just for holding tokens. However, the bill still allows stablecoins to be used in other systems to generate yields, such as DeFi lending, on-chain money markets, or interest-bearing accounts under supervision. Thus, stablecoins remain “boring” payment tools, while profit-generating products will be managed as separate financial entities. Safe Harbor for Unregistered DeFi CLARITY also directly addresses DeFi. Instead of debating “wallets or websites,” the bill applies a control-based test. If a web interface does not hold user funds, does not hold private keys, and does not have the authority to block or reorder transactions, it is considered pure software, not a broker or exchange. This creates a legal pathway for non-custodial platforms like Uniswap, 1inch, or MetaMask’s swap interface. Conversely, any entity capable of controlling user assets, routing orders, or aggregating orders will be classified as a financial intermediary and must comply with strict regulations. Expectations and Controversies Although many investors and market participants highly anticipate – with an estimated 80% chance – that CLARITY will be signed into law this year, the draft still sparks debate. Some experts worry that the transaction oversight and universal registration provisions could impact privacy and decentralization principles. Additionally, regulations on stablecoin yields and DeFi remain hot topics, leaving both banks and the crypto community somewhat dissatisfied. Nevertheless, it is undeniable that CLARITY represents the most serious and comprehensive effort by the U.S. government to bring crypto out of the legal “gray area.” If passed, the bill will not only pave a clear path for Bitcoin and Ethereum but could also serve as a catalyst for the entire market to move toward a new growth cycle, with historic highs awaiting ahead.