The CLARITY Act of 2025

By Krystal Martin September 15, 2025

In a year defined by sweeping digital finance reform, the U.S. House of Representatives passed the Digital Asset Market Clarity Act of 2025, commonly known as the CLARITY Act, on July 17, 2025. Introduced in May by members of the House Financial Services Committee, the Act seeks to establish a unified, comprehensive regulatory framework for digital assets by formally delineating the respective jurisdictions of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).  

For the banking industry, the CLARITY Act is not just a legal formality, it is a foundational step toward the full integration of digital asset markets into the traditional financial system. As banks prepare for an increasingly digitized financial future, the Act provides long-awaited clarity, legal certainty, and new commercial opportunities.  

Defining the digital asset landscape 

One of the primary accomplishments of the CLARITY Act is its classification of digital assets into clearly defined categories as follows:  

CFTC oversight

Assets that derive their value from decentralized blockchain protocols, such as Bitcoin and Ethereum, are designated as digital commodities and will fall under the regulatory purview of the CFTC. 

SEC oversight 

The SEC will be responsible for overseeing digital assets that are offered and sold as part of an investment contract, particularly those dependent on the managerial efforts of a centralized entity and are considered investment contract assets. 

It’s important to note that Stablecoins, which had already been addressed in the recently enacted GENIUS Act, are not directly governed by the CLARITY Act but are referenced as a separate and parallel category. Their regulation is already placed under a distinct framework with oversight from the federal banking regulators (e.g. the Office of the Comptroller of the Currency (OCC), Federal Reserve, Federal Deposit Insurance Corporation (FDIC). Oversight of Stablecoins only intersect with the CLARITY Act insofar as they are used in broader digital markets.  

Crucially, the CLARITY Act mandates joint rulemaking by the SEC and CFTC to further define these asset classes, establish criteria for delisting noncompliant digital assets, and ensure ongoing coordination. This collaborative approach is designed to reduce regulatory gaps and provide consistent standards across the digital asset landscape. 

Implications and opportunities for banks  

The CLARITY Act creates a legal foundation for banks to engage directly in the digital asset economy in ways that had previously been constrained by regulatory uncertainty. Under the Act, banks may consider registering as digital commodity brokers or dealers, offering trading, settlement, or even custodial services for approved digital assets. This represents a major step forward in legitimizing institutional participation in crypto markets. 

The Act introduces a compliance regime for digital asset intermediaries, which is important to note for banks. Firms that may compete with banks, including crypto exchanges and custodians and decentralized finance (DeFi) organizations, who facilitate the trading or custody of digital assets must register with the appropriate federal agency and implement anti-money laundering (AML) and know-your-customer (KYC) controls consistent with the Bank Secrecy Act. Although the newly proposed requirements are significant, banks that are accustomed to rigorous compliance standards may find harmonization with existing AML/KYC frameworks that could present a strategic advantage. Banks that already operate within strict regulatory environments will likely be better positioned to incorporate digital asset operations under this new law than less regulated fintech entities or crypto-native firms.

The Act also opens the door for banks to operate alternative trading systems (ATS) for digital assets, provided they meet registration requirements and comply with investor protection mandates. This would allow banks to provide clients, both retail and institutional, with access to digital markets within the same trusted regulatory framework that governs equities and derivatives.  

Moreover, by clarifying the legal boundaries of asset classes, the CLARITY Act enables banks to innovate responsibly. With reduced risk of enforcement actions or conflicting agency interpretations, banks can develop digital custody offerings, explore tokenized asset platforms, and integrate blockchain-based services into their broader financial infrastructure.  

The Act is also expected to increase investor confidence. As oversight becomes more consistent and transparent, institutional demand for secure, regulated crypto access is likely to grow, particularly from asset managers, corporate treasuries, and high-net-worth clients. Banks that move early to offer such services may capture market share as trusted providers in an evolving ecosystem. 

Regulatory coordination and future considerations 

While the CLARITY Act makes significant strides, it does not resolve all regulatory questions. Critics argue that dual regulation by the SEC and CFTC could still create confusion or inefficiencies if joint rulemaking efforts falter. Moreover, some observers express concern that the Act may reduce investor protections by limiting the SEC’s authority in certain areas.  

Nonetheless, for the banking sector, the benefits are substantial. The Act provides long-needed certainty, supports innovation within a lawful framework, and signals a broader regulatory shift toward integrating digital assets into mainstream financial services.  

Banks must remain vigilant as implementation unfolds. The Senate is expected to review the bill later in 2025, and if enacted into law, federal agencies will have approximately six months to issue detailed rules. Banks should actively engage with regulators during this period, submit comments during rulemaking, and begin internal preparations for licensing, reporting, and operational compliance.  

Conclusion  

The CLARITY Act represents a pivotal moment in the evolution of U.S. financial regulation. By articulating how digital assets will be classified, regulated, and supervised, the Act lays the groundwork for safe and scalable integration of these technologies into the traditional banking system.  

For banks, this legislation is not merely a compliance obligation, it is a strategic opportunity. As digital assets become more popular with individuals and organizations alike, it is a top priority for banks to be able to manage, process, report on, and answer questions as their institutions serve this emerging and evolving area. Banks that take proactive steps to understand, implement, and capitalize on the new framework stand to lead in the next phase of digital financial services. However, Banks should be cautious about assuming immediate operational changes until the Senate finalizes the bill and agencies issue implementation rules. 

The Senate Banking Committee aims to finalize its version of the CLARITY Act by September 30, and the White House has expressed support for the legislation. However, the final form may integrate elements from both House and Senate proposals. 

If you would like to discuss digital assets further, or have any other questions, please contact Krystal Martin or your BNN advisor at 800.244.7444.