CLARITY Act: Shifting Oversight of Digital Assets Classified as Commodities to the CFTC

At a Glance

• The bill clarifies that digital commodities are not presumed to be securities and provides conditions for their classification. Digital commodities explicitly exclude certain securities, such as investment contracts or profit-sharing agreements. However, digital commodities may include notes, investment contracts or certificates of interest that meet specific criteria.
• The CLARITY Act’s bipartisan support in both authorizing committees bodes well for its prospects. Enacting digital asset legislation remains a priority for both Congress and the administration, and the bill is expected to receive a House floor vote later this summer. In parallel, the Senate recently passed the GENIUS Act, which establishes a regulatory framework for stablecoins tied to the U.S. dollar and further signals momentum toward comprehensive digital asset legislation.

On May 29, 2025, the House Committees on Financial Services and Agriculture introduced the Digital Asset Market Clarity Act of 2025 (CLARITY Act), a bipartisan bill that would establish a regulatory framework for digital commodities and assign oversight responsibilities to both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

The bill is widely viewed as a step toward supporting innovation in the world of blockchain, stablecoins and decentralized finance (DeFi), and introduces three primary guardrails:

1. Requiring issuers of digital commodities and blockchain-based systems to disclose detailed operational and economic information
2. Guidelines to distinguish between securities and commodities, thereby reducing ambiguity in digital asset classification
3. Prohibitions on affiliated persons of digital commodity issuers from offering or selling digital commodities acquired directly from issuers under certain exemptions unless specific conditions are met

Among the operational and economic information required to be disclosed, issuers must provide details about the blockchain systems tied to digital commodities, including supply processes, consensus mechanisms and access to transaction history. Issuers of digital commodities tied to immature blockchain systems must also file semiannual reports detailing development progress, ongoing efforts and related financial expenditures. The bill further provides special rules for digital commodity contracts, including certification requirements for listing or trading such commodities in cash or spot markets.

The bill clarifies that digital commodities are not presumed to be securities and provides conditions for their classification. Digital commodities explicitly exclude certain securities, such as investment contracts or profit-sharing agreements. However, digital commodities may include notes, investment contracts or certificates of interest that meet specific criteria. Furthermore, issuers of digital commodities may not be:

1. A development-stage company without a specific business plan or whose sole purpose is acquiring or merging with unidentified entities
2. An investment company under the Investment Company Act of 1940 or one excluded under Sections 3(b) or 3(c) of that Act
3. An organization located outside the United States or its territories

Issuers offering digital commodities tied to an immature blockchain system must also have a plan to achieve certification as a mature blockchain system within four years from the first sale of investment contracts tied to the commodity. In addition, purchasers may not own more than 10% of the commodity units following the transaction.

The bill prohibits digital commodity entities from engaging in certain transactions based solely on their registration status. For example, transactions may not involve investment contracts where the issuer fails to meet the organizational, business or regulatory conditions outlined in the bill. Digital commodity entities also may not enter into leverage transactions unless specifically authorized under the Commodity Exchange Act (CEA), and restrictions may apply to mixed transactions involving both securities and commodities unless specific reporting requirements are satisfied.

In a notable example of infrastructure that may align with the regulatory framework contemplated by the CLARITY Act, the Northern Trust Company has developed its Northern Trust Carbon Ecosystem, a platform that digitizes carbon and other sustainable commodities. These digital assets are held with Northern Trust acting as custodian, offering a model for how regulated digital commodity infrastructure may evolve under the proposed regime — particularly in the context of environmental and sustainability-linked assets.

The CLARITY Act’s bipartisan support in both authorizing committees bodes well for its prospects. Enacting digital asset legislation remains a priority for both Congress and the administration, and the bill is expected to receive a House floor vote later this summer. In parallel, the Senate recently passed the GENIUS Act, which establishes a regulatory framework for stablecoins tied to the U.S. dollar and further signals momentum toward comprehensive digital asset legislation.

This momentum underscores the need for companies to prepare now for a rapidly evolving digital asset regulatory landscape.

What Companies Should Do Now

• Review Asset Classification Models — Evaluate whether your digital products qualify as commodities, securities or hybrid instruments under the bill’s framework.
• Confirm Issuer Eligibility — Assess whether your entity could be excluded from issuer status due to corporate structure, location or investment vehicle classification.
• Prepare for Enhanced Disclosure — Begin laying the groundwork for semiannual progress reports and blockchain system disclosures, especially for early-stage projects.
• Audit Transaction Structures — Review leverage, affiliate and mixed transactions for compliance with the bill’s limitations and conditions.
• Monitor Implementation Activity — Track forthcoming SEC and CFTC rulemaking that will shape how the CLARITY Act is enforced, if enacted.

Companies should also assess whether their existing governance, disclosure and risk management practices align with the bill’s anticipated issuer obligations.

For More Information

If you have questions, please contact any of the authors below or any of the Faegre Drinker attorneys with whom you work.