---
type: source
title: "CLARITY Act status: House passed, Senate stalled on stablecoin yield — decentralization on-ramp mechanism"
author: "Multiple sources (KuCoin, CoinGecko, Dentons, Congress.gov)"
url: https://www.kucoin.com/news/articles/what-is-the-clarity-act-a-2026-guide-to-us-crypto-market-structure-law
date: 2026-01-00
domain: internet-finance
secondary_domains: []
format: article
status: unprocessed
priority: high
tags: [clarity-act, regulation, sec, cftc, digital-commodities, stablecoins, decentralization]
---

## Content

The Digital Asset Market Clarity Act of 2025 (CLARITY Act) — comprehensive US market structure bill:

**Legislative Status (as of March 2026):**
- Passed the House in late 2025
- Senate Banking Committee delayed markup in January 2026
- Stalled on stablecoin yield debate (whether stablecoins can pay yield without banking product classification)
- Projected implementation: late 2026 or early 2027 pending compromise
- White House convened banking/crypto representatives to resolve disagreements — constructive but no compromise as of Feb 2026

**Key Mechanism — "Decentralization On-Ramp":**
- Allows assets to transition from security-like (SEC) to commodity-like (CFTC) status as networks mature
- Statutory pathway replacing previous court-based determinations
- Assets achieve commodity status when "sufficiently decentralized or used primarily for functional purposes on a blockchain"
- Specific technical metrics for measuring decentralization not yet defined

**Classification System:**
- Digital Commodities (CFTC jurisdiction): Assets meeting decentralization thresholds — value derived from blockchain network use, not promoter efforts
- Restricted Digital Assets (SEC jurisdiction): Investment contract-like tokens until decentralization milestones achieved
- Excludes securities, derivatives, payment stablecoins from digital commodity definition

**Registration & Protection:**
- Digital Commodity Exchange (DCE) registration framework under CFTC
- Customer fund segregation mandated (response to FTX collapse)
- Exchanges cannot commingle customer and corporate funds
- Market integrity, asset segregation, conflict management requirements
- Issuer disclosure requirements: source code, tokenomics, token distribution

**DeFi Treatment:**
- "Control person" liability for protocol developers is contested
- Front-end access and KYC requirements under debate
- Software developer protections are a key negotiation point

**Parallel Bill — Digital Commodity Intermediaries Act (DCIA):**
- Advanced by Senate Agriculture Committee on Jan 29, 2026 (party-line vote)
- Gives CFTC exclusive jurisdiction over digital commodity spot markets
- 18-month rulemaking timeline after enactment
- Must be reconciled with Banking Committee draft and House CLARITY Act

## Agent Notes
**Why this matters:** The "decentralization on-ramp" is potentially the most important regulatory mechanism for futarchy-governed tokens. If a MetaDAO ownership coin can demonstrate sufficient network decentralization, it transitions to commodity status regardless of initial distribution — bypassing the entire Howey test analysis.
**What surprised me:** The functional test for commodity status — "value derived from blockchain network use, not promoter efforts" — directly maps to the ownership coin thesis. Ownership coins ARE functional (they govern treasuries via futarchy) rather than dependent on promoter effort.
**What I expected but didn't find:** Any explicit mention of prediction markets, futarchy, or DAOs in the CLARITY Act provisions. The legislation appears blind to governance-specific tokens — they'd need to fit into the general digital commodity framework.
**KB connections:** [[Living Capital vehicles likely fail the Howey test for securities classification because the structural separation of capital raise from investment decision eliminates the efforts of others prong]] — CLARITY Act offers complementary path. [[futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires]] — may become less important if statutory path exists.
**Extraction hints:** New claim on decentralization on-ramp as complementary regulatory path. Update to regulatory uncertainty claims.
**Context:** The CLARITY Act represents the first comprehensive US market structure legislation for digital assets. Stablecoin yield debate is the current blocker — not directly related to futarchy but affects timeline.

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: [[Living Capital vehicles likely fail the Howey test for securities classification because the structural separation of capital raise from investment decision eliminates the efforts of others prong]]
WHY ARCHIVED: The "decentralization on-ramp" mechanism offers a statutory alternative to the Howey structural defense. Two legal paths are better than one. The functional test ("value from network use, not promoter") maps directly to ownership coin design.
EXTRACTION HINT: Focus on (1) decentralization on-ramp as complementary to Howey defense, (2) functional test alignment with ownership coins, (3) implication that regulatory uncertainty character is changing (from "no rules" to "which rules").
