a16z: How Should Crypto Entrepreneurs Understand the CLARITY Act?
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a16z: How Should Crypto Entrepreneurs Understand the CLARITY Act?
Following the legislation, the U.S. will be better positioned to combat fraud and foster innovation—similar to the growth spurred by the GENIUS Act.
Navigating Web3 tides with focused insightsBy: milesjennings
Translated by: Jiahuan, ChainCatcher
The Senate Banking Committee has just advanced cryptocurrency “market structure” legislation—legislation concerning market segmentation, regulatory responsibilities, and trading rules—in a bipartisan vote, marking a historic moment for the crypto industry.
Why? Because the Digital Asset Markets CLARITY Act will finally establish clear rules for blockchain networks and digital assets.
For the past decade, the U.S. has lacked regulatory clarity, distorting markets, stifling innovation, and exposing consumers to significant risks. CLARITY will end this.
The Securities Act of 1933 established investor protections that underpinned a century of capital formation and innovation in the United States. CLARITY carries similar significance—a once-in-a-generation shift in the U.S. financial regulatory landscape, unlocking enormous opportunity.
With today’s passage through Senate committee review, this foundational legislation—critical to the entire crypto industry—is closer than ever to becoming law.
Founders of startups, consumers, and large traditional financial institutions and investors migrating onchain will all benefit.
Next, the bills from the two congressional committees will be merged into a single, comprehensive bill, voted on by the full Senate. Upon passage, it will move to the House for approval—and if successful, to the White House for presidential signature.
Why the U.S. Needs CLARITY Now
Over the past decade, the crypto industry has expanded rapidly—but the U.S. has never established a comprehensive regulatory framework. Regulators have instead cobbled together existing laws to govern this new sector, a strategy that has been an outright failure.
This approach has not only created legal ambiguity and inconsistent interpretations, but also triggered serious government overreach and abuse of authority.
Regulatory uncertainty has done more than hinder innovation—it has provided fertile ground for bad actors. In many high-profile crypto scandals over the past decade, malicious actors easily launched products exploiting regulatory gaps, harming consumers.
Meanwhile, responsible builders have faced questionable “enforcement-by-enforcement” practices.
This uncertainty has already driven crypto development overseas. When the U.S. fails to provide space for innovation, entrepreneurs seek other jurisdictions—including those with more refined regulatory regimes.
The EU’s Markets in Crypto-Assets (MiCA) regulation and the UK’s crypto regulatory framework exemplify how far behind the U.S. has fallen.
Fortunately, no other jurisdiction has yet gotten its regulatory approach fully right—for U.S. innovation. But tailored regulatory frameworks will inevitably attract entrepreneurial activity—and along with it, economic value and job creation—to those regions.
Imagine what the U.S. economy would look like if Amazon, Apple, Facebook, Google, Microsoft, Netflix, NVIDIA, and Salesforce had all been founded outside the United States.
So, if the U.S. provides regulatory clarity for builders, domestic innovation stands to gain enormously. The GENIUS Act—the Guiding and Establishing National Innovation for Stablecoins Act—passed in July 2025, serves as a prime example.
GENIUS established a regulatory framework for stablecoins—digital assets pegged to fiat currencies, typically the U.S. dollar—sparking an entirely new model: open monetary infrastructure.
Following its passage, unprecedented growth and adoption followed—benefiting both the U.S. economy and the long-term dominance of the U.S. dollar.
When legal frameworks are designed to both foster innovation and protect consumers, the U.S. leads—and the world benefits.
Entrepreneurs and early users who believe in crypto’s promise deserve a clear regulatory framework to realize their vision—regardless of external perceptions.
They also need a framework that recognizes the potential of blockchain networks—to drive a vital and novel technological platform transformation. This transformation must go beyond speculative applications enabled by poor policy, enabling builders to construct outside the initial financial use cases (which are already covered by existing U.S. regulations).
CLARITY is precisely tailored to build such a clear framework.
How We Got Here
Much of CLARITY’s content is not new. Many of its concepts and principles draw from existing commodity and securities laws. The bill also evolved from prior legislative iterations—including two “market structure” bills originating in the House:
The Financial Innovation and Technology for the 21st Century Act (“FIT21,” HR 4763) in 2024; and the Digital Asset Markets CLARITY Act (HR 3633) in 2025.
Like the current Senate bill, FIT21 and the House version of CLARITY sought to provide blockchain networks with a pathway to:
- Safely and effectively launch blockchain networks and digital assets in the U.S.;
- Clarify the regulatory division of responsibility between the SEC and CFTC in crypto, explicitly defining whether digital assets are securities or commodities;
- Ensure oversight of crypto exchanges;
- Further protect U.S. consumers through rules governing crypto trading.
Two years ago, FIT21 passed with overwhelming bipartisan support (279–136, including 71 Democrats).
The House version of CLARITY passed in July 2025 with even stronger bipartisan backing (294–134, including 78 Democrats).
Together, these bills sent a strong signal to the Senate: accelerate market structure legislation for crypto.
Building on the House’s bipartisan momentum, the Senate version of CLARITY advances further—and improves upon earlier proposals in several key areas (detailed below). It has progressed steadily in the Senate over several years—with the past year being the fastest-paced phase:
- In June 2022, Senators Lummis and Gillibrand introduced the Lummis-Gillibrand Responsible Financial Innovation Act—the first bipartisan legislative proposal aiming to establish a comprehensive regulatory framework for crypto.
- In July 2025, the Senate Banking Committee—the committee overseeing the SEC—released a discussion draft within its jurisdiction, merging and harmonizing approaches from both the Lummis-Gillibrand Act and the House CLARITY bill.
- It issued a Request for Information (RFI), soliciting feedback and legislative solutions to balance innovation with financial stability and consumer protection.
- In September 2025, based on received input, the Senate Banking Committee released a second discussion draft.
- In January 2026, the Senate Banking Committee released another iteration, reflecting months of bipartisan negotiations.
- Also in January 2026, the Senate Agriculture Committee released and advanced its own market structure legislative draft within its jurisdiction.
- Today (May 14, 2026), the Senate Banking Committee has just advanced the portion of the CLARITY Act under its jurisdiction during a “markup” meeting.
Why CLARITY Matters: Networks Are Not Companies
For over a century, forming companies has been the primary engine of American innovation. This path is highly mature: entrepreneurs raise capital, launch ventures, and—if successful—generate profits for shareholders.
U.S. law has been finely tuned for this model—defining liability, emphasizing transparency, aligning incentives, and managing trust in founders and operators.
This framework works well for companies. But it does not work for networks.
Existing legal frameworks assume centralized control—and require that control to persist over time. Networks, however, have no central controller. They coordinate people, capital, and resources via shared rules—not centralized ownership.
Forcing network-based systems into a corporate framework distorts them into company-like structures: control re-centralizes, intermediaries re-emerge, and users dependent on the system are extracted from.
Across the digital economy, this dynamic has produced a set of company-like networks wielding immense centralized power—payment systems, e-commerce marketplaces, social platforms, app stores—that capture a disproportionate share of value created by participants.
A rideshare user pays $100 for a ride, while the driver receives only a fraction. A musician’s song is streamed millions of times, yet they earn mere pennies per dollar of revenue.
Wherever company-like networks dominate, most value flows to intermediaries. Traditional corporate law protects those intermediaries and their investors—but offers no protection to users, creators, or workers.
For much of the internet era, this trade-off was unavoidable. Open protocols lacked sustainable economic models and could not compete with the capital and coordination capacity behind company-like networks.
Blockchain changes that.
Blockchain—and the software protocols deployed on it—have given rise to a new kind of system: blockchain networks. These networks are intentionally designed to decentralize control, operate transparently, and exist as shared infrastructure owned and operated by users.
The value of blockchain networks increases with public usage—and can be distributed to participants—including those at the network’s edge—rather than captured solely by central nodes.
Blockchain makes it possible to “build networks that truly operate like networks—not like companies.”
Blockchain technology stands at a pivotal moment. Prior platform shifts—personal computers, mobile phones, the internet—rank among humanity’s most important technological innovations. Artificial intelligence is rapidly joining that list.
Yet each of these platform shifts ultimately concentrated power and control—leaving decisions about the fate of billions of consumers, creators, and developers in the hands of a few.
As more economic activity digitizes—and more processes are shaped by AI—the question of “who controls the digital systems we rely on” has become more critical than ever.
If control remains centralized, so too do the ability to shape outcomes, restrict access, and extract value: companies will dictate how networks operate—and who benefits.
Decentralized blockchain networks offer an alternative: infrastructure that no single participant can easily rewrite, censor, or redirect.
In other words, such networks can help decentralize existing platforms—replacing them with networks possessing digital public good attributes: reducing lock-in, dispersing control, embedding neutrality, minimizing single points of failure, and returning ownership to users.
The CLARITY Act is specifically designed to make this path viable.
As CLARITY moves toward full Senate consideration—and undergoes updates—we’ll share more on what it means concretely for crypto builders.
But if CLARITY clears the final remaining steps in the legislative process, the U.S. legal architecture will finally align with the fundamental nature of blockchain networks. Builders will be able to operate transparently, raise capital domestically, and build for the long term—without structural compromises forced by regulatory ambiguity.
And as more projects operate within—not outside—the U.S. regulatory perimeter, regulators and law enforcement agencies will gain better tools to combat fraud and abuse—longstanding problems plaguing the industry.
We’ve already seen what happens when crypto gains viable regulation: the GENIUS Act unleashed an innovation wave overnight. Today, crypto is already visible across major mainstream applications—from stablecoins to AI agents—and even more exciting developments lie ahead.
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