Here is the English translation:
Currently, the bill has been passed by the House with a high vote and is under review in the Senate, with the goal of completing legislation this year. The Senate is drafting its own market structure version and will discuss it based on the CLARITY Act.
**Author:** Cobo Global
With the official passage of the U.S. GENIUS Act, global attention is now focused on the next key legislation - the Digital Asset Market Clarity Act (CLARITY Act). This legislation aims to establish a clear, unified regulatory framework for the U.S. digital asset market. Currently, the bill has been passed by the House with a high vote and is under review in the Senate, with the goal of completing legislation this year. The Senate is drafting its own market structure version and will discuss it based on the CLARITY Act.
So, what are the core contents of the CLARITY Act? How will it work with the GENIUS Act to influence the U.S. and global markets? What survival and development potential do DeFi and self-custody have under the CLARITY Act framework? This article will comprehensively analyze these key questions.
**Why is the CLARITY Act Needed?**
Why is the CLARITY Act needed when we already have the GENIUS Act? In fact, another way to phrase this is: How will the CLARITY Act and GENIUS Act work together?
Currently, the GENIUS Act has become the first federal stablecoin law in the U.S., establishing basic rules for stablecoin issuance, custody, and operation, accelerating its application in payment and clearing scenarios, and promoting financial activities to migrate to blockchain. However, the GENIUS Act still only focuses on stablecoins themselves and does not regulate the underlying blockchain networks they depend on.
For a long time, blockchain systems have developed rapidly in an unregulated environment, making it difficult for legitimate businesses to develop medium and long-term strategies, while speculative behaviors profit from regulatory vacuums. Meanwhile, consumer rights lack protection, and systemic risks gradually accumulate in opaque infrastructure.
The CLARITY Act is designed precisely to fill this key gap. It proposes standards for measuring blockchain network security, transparency, and governance structures, clarifies the regulatory boundaries between the SEC and CFTC, fills policy blanks, and establishes compliance paths for underlying networks supporting stablecoin operations.
The GENIUS Act and CLARITY Act will form a regulatory closed loop for on-chain financial infrastructure: the former regulates assets, while the latter regulates infrastructure. Together, they both safeguard financial system stability and promote trusted technological innovation, providing the U.S. with institutional advantages in global digital economic competition. If successfully passed, CLARITY is expected to end on-chain compliance uncertainty and establish basic rules for on-chain financial order, with significance comparable to the 1933 Securities Act for traditional capital markets.
**What is the Clarity Act?**
After understanding its significance, it is necessary to clarify the core objectives and main contents of the CLARITY Act. The act aims to guide the digital asset industry towards regulated development by establishing a predictable, hierarchical regulatory framework that provides clear guidance for innovation while strengthening protection of market order and consumer rights.
The underlying logic of the CLARITY Act can be summarized as a "control-based" dynamic regulatory system. Its core is to apply differentiated regulation to different types of market participants based on the degree of decentralization: the more centralized, the stricter the requirements; the more decentralized, closer to the technical protocol itself, the more relaxed the regulation.
For centralized service providers (such as exchanges, brokers, market makers, etc.), the act requires registration with the CFTC and compliance with a set of traditional financial regulatory obligations, including customer due diligence (KYC), anti-money laundering (AML) measures, fund segregation, manipulation prevention, and regular disclosure. Because these intermediaries bear responsibilities like asset custody and transaction matching, they have the potential for systemic risk spillover and should be subject to strict regulation.
In contrast, the act takes a more relaxed attitude towards truly decentralized protocols and applications (such as DeFi systems where users interact directly through smart contracts without relying on any intermediaries). The operational risks of such protocols are primarily determined by underlying code and network consensus, not institutional behavior. If control has been transferred from the team to on-chain governance structures, they can be exempted from some traditional regulatory obligations.
To implement this principle, the 'CLARITY Act' introduces a "Decentralization Maturity Framework" to objectively assess whether a project is still in a centralized stage or has been substantially decentralized. The core indicators revolve around the control of the network or native assets: if still controlled by the founding team, foundation, or key entities, it is viewed as a security-like asset subject to stricter standards; if governance has been distributed to the community and control is no longer centralized, it is treated as a commodity-type asset with reduced regulatory intensity. This mechanism attempts to provide dynamic space for industry development while ensuring regulatory resources focus on intermediary risk segments.
What Does This Mean for DeFi and Self-Custody Products?
The 'Clarity Act' draws important boundaries for decentralized finance (DeFi) and self-custody products.
For DeFi, the act clearly states that if the system itself does not act as an intermediary, it can be exempted from traditional trading platform regulatory requirements. This principle provides a clear compliance path for native token issuance, decentralized governance, and user-managed assets, and opens up space for continuous DeFi project innovation.
However, this set of rules also has obvious limitations. The current act primarily focuses on "digital commodities" and does not cover regulated asset types such as tokenized securities and derivatives. Meanwhile, although the federal level provides direction, DeFi projects may still be affected by state-level regulatory differences. These gaps still need to be addressed through further Senate legislation or coordination by agencies like the SEC and CFTC.
For "tool-type" self-custody products, the 'Clarity Act' provides a clear exemption path: as long as fund control remains in the user's hands and the protocol itself does not provide custody, transfer, and other functions, it is not considered a money services business, thus can operate under lighter regulation. This unlocks compliance space for smart account-guided debit authorization, periodic payments, and permission management products.
The core is the complete separation of "function" and "custody" - service providers build interfaces and logic, users retain asset control through wallets, and developers no longer play an intermediary role, directly meeting the exemption principles outlined in the 'Clarity Act'. Implementing this model requires underlying infrastructure support. Cobo provides a modular solution of MPC wallets, self-custody accounts, security risk control, and settlement capabilities, offering developers an integrated solution that "does not bear custody responsibilities". Its smart account framework supports programmable functions like yield routing, periodic payments, and payment commissions, helping developers build financial products with lower compliance costs while ensuring user fund safety and sovereignty.
Additionally, Cobo already supports multi-country bank transfers and 24/7 stablecoin settlement, meeting the 'Clarity Act's expectations for a global, regulatable financial service infrastructure, and providing a implementable "compliant and programmable" paradigm for Web3 finance.
Reference link: https://a16zcrypto.com/posts/article/genius-act-clarity-act-crypto-legislation-explained/
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