In-Depth Policy Analysis of the US CLARITY Act: The Clash Between Traditional and New Finance and the Path to Compliance

04/04/202603:53:15

Market Trends

Bifu Research | 2026

Executive Summary

This report provides an in-depth analysis of the core framework, jurisdictional divisions, and latest legislative developments of the U.S. Digital Asset Market Structure Clarity Act (CLARITY Act). Designed to end the chaos of "regulation by enforcement" in the crypto market, the CLARITY Act is currently facing significant headwinds in the Senate. The core disagreements behind the legislative stalemate reflect not only a zero-sum game between crypto upstarts and traditional Wall Street banks over "stablecoin yield generation" and "RWA tokenization," but also internal schisms within the crypto industry driven by the uneven impact on core commercial models. Bifu Research advises that, in the face of an impending reshaping of the market landscape, investors and industry participants should abandon any illusions of absolute regulatory freedom and proactively reallocate their compliant assets and strategic positioning.

I. Bill Overview and Core Positioning

Full Name and Background: The bill, fully titled the Digital Asset Market Structure Clarity Act of 2025 (CLARITY Act), was drafted to end the chaotic state of "Regulation by Enforcement" historically spearheaded by the U.S. Securities and Exchange Commission (SEC). It marks the first attempt at the federal level to construct a comprehensive, codified legal framework for digital assets.
Legislative Intent: The bill seeks to clarify the legal definitions of digital assets through a structured federal regulatory framework, thereby eliminating the compliance uncertainties that have long plagued the market. This aims not only to provide a safe harbor for domestic crypto innovation but, more profoundly, to pave the way for the large-scale, systematic entry of traditional Wall Street capital (e.g., pension funds and major asset managers).

II. Regulatory Framework: Jurisdictional Division Between the CFTC and SEC

The core breakthrough of the bill lies in attempting to resolve the protracted jurisdictional turf war between the SEC and the CFTC.

Division Criteria: The bill establishes a "Functional and Decentralized" test standard. Regulators will no longer define jurisdiction based solely on the initial issuance method of a token, but rather on the degree of decentralization and the actual operational mechanics of the underlying blockchain network.
CFTC (Commodity Futures Trading Commission) Jurisdiction: When the underlying blockchain network of a crypto asset meets the statutory decentralization standard (e.g., Bitcoin, Ethereum, and certain mature public chain tokens), the asset will be explicitly defined as a "Digital Commodity." Its spot markets, secondary market trading platforms, and related brokerage operations will fall under the exclusive jurisdiction of the CFTC.
SEC (Securities and Exchange Commission) Jurisdiction: If an asset possesses clear financing attributes, heavily relies on a core team or centralized entity for operation and promotion, and fits the traditional characteristics of "Investment Contract Assets," it will remain under SEC jurisdiction. Such assets must comply with strict primary market issuance, disclosure, and investor protection rules.

III. Core Regulatory Framework and Compliance Requirements

Unified Industry Standards: The bill establishes a unified set of federal registration thresholds and conduct standards for crypto exchanges, brokers, and dealers, allowing compliant crypto platforms to operate legally as digital commodity trading facilities overseen by the CFTC.
Fund Segregation and Custody: Addressing the systemic issues exposed by the FTX collapse, the bill strictly mandates that centralized trading platforms segregate customer funds from proprietary assets, requiring them to be independently held by Qualified Custodians. Commingling of assets and unauthorized "Rehypothecation" without explicit customer consent are strictly prohibited, fundamentally safeguarding against the systemic risk of misappropriated customer assets.
Stablecoin Framework Integration: The bill attempts to further solidify the regulatory framework for permitted payment stablecoins. By explicitly excluding them from the definition of traditional securities, it establishes their status as legal mediums of exchange and imposes rigorous auditing requirements for reserve transparency.

IV. Legislative Timeline and Current Headwinds

House Phase (Completed): In July 2025, the CLARITY Act passed the House of Representatives with an overwhelming majority. Upon the initial establishment of its framework, it was widely embraced by the crypto industry.
Senate Revision and Stagnation (Current Status): Entering the first quarter of 2026, the bill's advancement in the Senate hit a major roadblock.
- Coinbase's Public Opposition: In early 2026, Coinbase CEO Brian Armstrong publicly expressed dissatisfaction with the Senate's revised version on social media, bluntly stating, "We'd rather have no bill than a bad bill." He pointed out that the banking sector was engaging in "regulatory capture" and expressed concern that certain restrictive clauses could hinder industry innovation.
- Intervention by High-Level Political Forces: According to multiple mainstream media reports, U.S. President Donald Trump personally met with Brian Armstrong and expressed attention to the crypto industry at the policy level, urging the banking sector and the crypto industry to reach a "good deal." Despite high-level mediation, institutions representing native crypto interests continued to express refusal to multiple Senate offices regarding the draft restrictions on stablecoin yields and tokenized assets.
Expected Implementation Timeline: The bill has currently entered the spring recess amid fierce push-and-pull between the two parties, traditional banking advocates, and crypto lobbying groups. Whether a final compromise version can be reached and signed into law before the midterm elections remains uncertain.

V. Core Disagreements: The Clash of Old and New Finance and Internal Industry Schisms

Looking past the legal text, the current legislative stalemate is essentially a battle among different interest factions.

External Conflicts: Crypto Upstarts vs. Wall Street Banks (The Battle for "Net Interest Margin")
- The Fight Over Stablecoin Yield: Traditional banks are deeply concerned that stablecoins (like USDC) will directly or indirectly distribute yields from underlying Treasury bills to users. Once this model is fully legalized, it could create deposit-gathering pressure on the banking system's low-cost retail deposits. Consequently, the banking sector has aggressively lobbied the bill to impose strict limitations on stablecoin yield generation models.
- Thresholds for RWA and Traditional Asset Tokenization: The Senate's amended draft sets extremely high compliance thresholds and strict limitations on the tokenized trading of traditional financial assets (such as stocks and bonds) on public blockchains. This is widely interpreted by the market as traditional financial institutions building a moat to prevent crypto platforms from over-penetrating the core asset trading domain of traditional finance.
Internal Conflicts: The Coinbase Faction vs. The Broader Crypto Faction (Schisms Triggered by Realigned Interests)
- The Pains of Stablecoin Issuers: Interest income derived from USDC stablecoin reserves is currently an extremely high revenue pillar for Coinbase (generating roughly $1.35 billion in 2025, accounting for nearly 20% of total revenue). The bill's "interest ban" would directly destroy the most stable "cash cow" business within its ecosystem. Impacted by the expectation of yield restrictions in the draft bill, Circle, the issuer of USDC, saw its stock price suffer a massive hit in late March 2026, and Coinbase, whose interests are deeply intertwined, also exhibited a significant corresponding downward trend.
- Backlash from the Broader Crypto Faction: Surprisingly, the most vocal criticism of Coinbase has come not from traditional finance, but from within the crypto industry. Mainstream forces including a16z core partner Chris Dixon, Robinhood's CEO, and Ripple (who have publicly posted multiple times in support of establishing a clearly structured market bill) argue that achieving overall regulatory legitimacy is far more critical than preserving the interest income of a single company. They criticized Coinbase for placing its own commercial interests above the legalization process of the entire crypto industry, essentially engaging in commercial coercion at the expense of hindering industry development.
- Tether's High-Dimensional Strike: As the world's largest stablecoin issuer, Tether primarily retains the yield from its reserves without distributing it to users, and is therefore largely unaffected by the negative impacts of the bill's "interest ban." While its competitors are bogged down in the legislative quagmire, authoritative news reports indicate that Tether opportunistically announced it is actively preparing to hire a top-tier international accounting firm (such as the "Big Four") to conduct a comprehensive, independent compliance audit. This move is intended to reinforce its compliant image, attempting to thoroughly squeeze out competitors constrained by the bill in the market's battle for trust.

VI. Summary of Market Impact

Reshaping the Market Landscape: The advancement of the CLARITY Act is by no means a simple "industry tailwind," but rather a profound reallocation of interests. In the short term, the stablecoin track may face a shakeup in compliance thresholds. Models that do not rely on distributing interest margin dividends to users (such as Tether) inadvertently possess a larger buffer space in this round of regulatory maneuvering.
Investment and Business Response Strategies: Facing a bill that will most likely be finalized through various compromises, we advise investors and industry practitioners to abandon illusions of an "absolute freedom" crypto utopia. Strategic reviews and reallocations should be conducted well in advance regarding compliant asset configurations (especially in the potentially more strictly regulated RWA sector), the choice of stablecoin networks, and underlying trading infrastructure. All market participants must prepare for short-term compliance pains to withstand the impending industry upheaval once traditional financial titans officially enter with regulatory licenses.

References

Disclaimer

This report is prepared by Bifu Research Institute and is for information purposes only. It does not constitute any investment advice, legal opinion, or endorsement of any specific asset. The digital asset market is highly volatile and risky; past performance does not indicate future returns. Users should fully assess risks and consult professional advisors before investing.

The policy interpretations in this report are based on the regulatory environment at the time of publication. As local laws and regulations may be updated and adjusted over time, please always refer to the latest documents published by official regulatory bodies for specific compliance requirements. Bifu assumes no legal liability for any decisions made based on this report.

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