Senator Cynthia Lummis is proposing the CLARITY Act with a message designed to appeal to both sides of the cryptocurrency regulation debate. That means protecting developers and empowering police.
The Wyoming Republican highlighted provisions of the Digital Asset Market Clarity Act of 2025 that would protect software developers from being classified as money transmitters while also giving law enforcement stronger tools for digital asset enforcement.
What CLARITY laws actually do
The bill, introduced as HR 3633, takes aim at one of the most persistent headaches of cryptocurrency: the problem of not knowing who is in charge. The bill formally establishes regulatory authority between the SEC and CFTC, establishing a clear path for what those agencies oversee in the digital asset space. The SEC will handle digital assets that look like securities, while the CFTC will lead digital products.
For developers, the key provisions are simple: Blockchain developers are expressly exempted from being classified as money transmitters under certain conditions. This is important because money transfer labels come with numerous licensing requirements, compliance costs, and legal exposure that can cripple early-stage projects before they can send a single line of code to the mainnet.
On the enforcement side, the bill targets digital goods intermediaries with anti-money laundering and anti-financing of terrorism regulations. This is a specific compliance order designed to provide federal agencies with the legal tools they need to pursue malicious actors operating in cryptocurrency markets.
The bill also includes a provision banning the Federal Reserve from issuing central bank digital currencies for monetary policy purposes, a privacy-focused measure that would take effect immediately upon enactment. Lummis has long positioned herself as a defender of financial privacy, and the CBDC ban is consistent with her broader philosophy that Bitcoin represents what she calls “the money of freedom.”
Legislative Calendar and Future Plans
Senate markup on CLARITY Act set for May 2026. The bill focuses on stablecoin regulation and stands as a natural successor to the GENIUS Act, which has already passed the early stages of the legislative process.
The bill also mandates a federal study of DeFi risks and illicit use of digital assets, with a report to be submitted within 180 to 360 days of enactment. These studies are designed to inform future regulatory adjustments rather than imposing immediate rules on decentralized finance protocols.
Cryptocurrency advocacy groups have weighed in on the bill. Industry leaders cited the lack of a consistent federal framework as a key driver of the flow of talent and capital to jurisdictions with more predictable regulatory environments.
What this means for investors and the wider market
The most immediate impact for investors is a clearer understanding of which digital assets are subject to securities laws and which are not. This distinction impacts everything from exchange listings to institutional allocation decisions.
AML and CFT compliance requirements for digital goods brokers create new costs and operational burdens. Smaller exchanges and brokerage platforms may be challenged by the costs of meeting federal compliance standards.
The essential research on DeFi risks is worth watching closely as it could lead to conclusions about whether future regulations will treat decentralized protocols as infrastructure or regulated intermediaries.
A CBDC ban removes a potential monetary policy tool that other major economies are actively developing. China’s digital yuan is already in circulation, and the European Central Bank is pursuing a digital euro project.
The May 2026 markup represents a specific milestone that traders and institutions will be paying attention to. May 11, 2026 Senator Lummis highlighted the new protections for blockchain developers included in the bill, emphasizing the law enforcement benefits as the bill advances for committee consideration.