Today, May 29, 2025, key members of the U.S. House of Representatives introduced the Digital Asset Market Clarity Act, a bipartisan effort aimed at establishing a clear regulatory framework for the cryptocurrency industry. The proposed legislation seeks to define regulatory responsibilities between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), providing much-needed clarity for digital asset markets.

Key Provisions:

• Regulatory Jurisdiction: The bill delineates the roles of the CFTC and SEC, aiming to resolve longstanding ambiguities regarding oversight of digital assets.
• Customer Protection: It mandates that cryptocurrency dealers and brokers maintain separation between customer funds and their own, enhancing consumer protection.
• Conflict of Interest Disclosures: Firms would be required to disclose any conflicts of interest, promoting transparency within the industry.
• Legal Precedent Alignment: The legislation incorporates language consistent with the SEC vs. Ripple case, acknowledging that secondary market transactions are not necessarily deemed securities, even if the initial sale was.

Industry advocates have praised the proposal as a sensible step toward a structured regulatory framework. Although a similar bill was passed by the House in a previous session, it did not advance in the Senate. The current legislative proposal is expected to proceed to hearings as the next step.

Implications for Compliance Professionals:

• Regulatory Alignment: Firms should assess their operations to ensure alignment with the proposed regulatory divisions between the SEC and CFTC.
• Operational Adjustments: Implementing systems to segregate customer funds and disclose conflicts of interest will be crucial for compliance.
• Legal Review: A thorough legal review of digital asset offerings and transactions is recommended to determine their classification under the new framework.

Finassent advises organizations to proactively engage with policymakers and industry groups to contribute to the shaping of a regulatory environment that balances innovation with investor protection. If you require further analysis or assistance in adapting your compliance strategies to these developments, feel free to reach out.

Source: Press Release: Chairman Hill Unveils Bipartisan Digital Asset Market Structure Legislation and Text of Digital Asset Market Clarity (CLARITY) Act