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Highlights
- CLARITY Act drives the role of the CFTC and SEC in the regulation of the crypto assets.
- Framework suggests disclosures, compliance and anti-money laundering safeguards on behalf of investors.
- Bipartisan support indicates the desire for a stronger U.S digital asset market oversight.
The CLARITY Act framework has been published by Senate Democrats, explaining a broad strategy of supervising digital asset operations in the United States. The proposal presents seven principles that will be used to address any gaps in the oversight with a goal of protecting investors and providing business with a clear direction on compliance.
CLARITY Act Expands CFTC and SEC Roles in Crypto Oversight
Lawmakers said the CLARITY Act framework is essential as the digital asset market approaches a $4 trillion valuation. A central feature of the released framework grants the Commodity Futures Trading Commission authority over digital commodities.
This would apply to non-security assets like Bitcoin and close long-standing gaps in spot market oversight. This is an extension of the crypto market structure bill released by the U.S. senate recently.
Digital commodity platforms would also require exposure of token information such as their governance, technology and trading risks.
The Crypto Act plan guides the Securities and exchange commission to identify the application of the securities laws on digital assets. Developers and issuers could request formal rulings on whether tokens qualify as securities. Lawmakers said this provision would reduce costly litigation and give businesses regulatory certainty.
Digital asset issuers would face stronger disclosure requirements. Reports must include project governance, insider holdings, technology, and use of proceeds. These rules are designed to give investors’ confidence while deterring fraud and insider abuse.
Platforms selling digital assets would also be placed under tight control. The SEC would align exchanges, brokers and custodians with existing custody, pricing and execution rules. Custodial finance institutions would receive dedicated supervision to mitigate against risks associated with their operations.
Framework Aims For Proper Accountability And Greater Regulatory Capability
The CLARITY Act structure also aims at fighting illicit finance. Platforms serving Americans would be obliged to register with the Financial Crimes Enforcement Network and have anti-money laundering programs. Even offshore platforms that deal with Americans would be required to obey similar regulations, including financial crime restrictions.
Accountability of public officials is another aspect of the framework. The proposal prohibits the issuance or the profiting of any digital asset by elected leaders and their family members. In addition, it requires reporting of digital asset ownership to ensure absence of conflict of interest.
Senator Cynthia Lummis welcomed the CLARITY Act framework from the democrats. She described it as a constructive step toward bipartisan collaboration. The senator had also said that congress will pass the crypto market structure bill this year. She stressed that securing America’s financial future requires both parties to deliver durable digital asset legislation.
Meanwhile, the Clarity Act plan will require more money and personnel to facilitate the effectual enforcement of the plan by the SEC, CFTC and Treasury. Lawmakers said bipartisan participation within these agencies is vital to ensure legitimacy and lasting oversight.
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