The Digital Asset Market Clarity Act, known as the CLARITY Act or H.R. 3633, has moved forward in Congress, passing the House in July 2025 and clearing the Senate Banking Committee on May 14, 2026. The bill aims to end the long-standing jurisdictional conflict between the SEC and the CFTC by giving the CFTC primary oversight of spot digital commodity markets. Critics, however, warn that the agency may lack the necessary staffing and funding to handle this expanded mandate.
At a recent policy discussion, Brookings fellow Tonantzin Carmona highlighted that the CFTC’s FY2026 budget of approximately $365 million and its request for $410 million and 650 full-time staff in FY2027 are insufficient for the scale of responsibilities proposed. She compared the task to major post-crisis financial rules, noting the CFTC was originally created for commodity futures markets and not built for retail-heavy spot crypto oversight.
The CLARITY Act would require crypto exchanges, brokers, dealers, and custodians to register with the CFTC, with a 360-day rulemaking timeline and 270-day effective date for registration. Assets like Bitcoin, Ether, Solana, and XRP could be classified as digital commodities, moving them outside the SEC’s main purview. Carmona argued that consumer protection functions, including fraud and manipulation safeguards, do not automatically transfer to the CFTC with a legal label change.
Separately, Brookings fellow Aaron Klein stressed that regulatory capacity has been eroded by personnel departures and structural changes, and that fragmented oversight could repeat past failures. He called for closer coordination between the SEC and CFTC, even suggesting a long-term merger, though he doubted Congress's readiness. In the interim, reports of shared office space between the agencies were praised as a practical step to improve collaboration.
The bill’s supporters, including Senate Banking Committee Chairman Tim Scott, see it as a path to clear rules and a national market structure for crypto. But with the CFTC’s resource constraints and the retail nature of spot markets, the debate is shifting from what the law says to who is ready to enforce it.
