a16z: How Crypto Entrepreneurs Should Understand the CLARITY Act

Original Title: What builders need to know about the CLARITY Act, what it is and why it matters

Original Author: miles jennings, a16z crypto

Original Translation: Jiahuan, ChainCatcher

The Senate Banking Committee has just voted in a bipartisan manner to advance crypto "market structure" legislation (i.e., legislation concerning market division, regulatory responsibilities, and trading rules), marking a historic moment for the crypto industry.

Why? Because the CLARITY Act for Digital Asset Markets will finally establish clear rules for blockchain networks and digital assets.

Over the past decade, the lack of clear regulation in the United States has distorted markets, stifled innovation, and exposed consumers to significant risks. The CLARITY Act will put an end to this.

The Securities Act of 1933 established investor protections, underpinning a century of capital formation and innovation in the U.S. The significance of the CLARITY Act is similar—a once-in-a-generation shift in the American financial regulatory landscape, bringing immense opportunities.

With today's passage through the Senate committee, this foundational legislation, crucial for the entire crypto industry, is closer than ever to becoming law.

Both startup founders, consumers, and large traditional financial institutions and investors migrating onto the chain stand to benefit.

Next, the bills from the two congressional committees will be merged into a single comprehensive bill for a full vote by the Senate. Upon passage, it goes to the House for approval, and if successful, to the White House for the President's signature.

Why the U.S. Needs the CLARITY Act Now

Over the past decade, the crypto industry has expanded, but the U.S. has never had a complete regulatory framework. Regulators have had to patch together existing laws to govern this industry, an approach that has been an utter failure.

This has not only created confusion in legal interpretation and inconsistent official stances but has also led to significant government overreach and abuse of power.

This regulatory uncertainty hasn't just hindered innovation; it has also provided fertile ground for bad actors. During the highly publicized negative incidents in the crypto space over the past decade, malicious individuals could easily launch products that exploited regulatory loopholes to exploit consumers.

Meanwhile, responsible builders have faced questionable "regulation by enforcement."

This uncertainty has already pushed crypto development overseas. When the U.S. fails to provide space for innovation, entrepreneurs look to other jurisdictions, including those that have already introduced more refined regulatory regimes.

The EU's Markets in Crypto-Assets Regulation (MiCA) and the UK's crypto regulations are two examples of the U.S. falling behind.

Fortunately for American innovation, no other jurisdiction has yet perfected its regulatory approach. However, tailored regulatory regimes will eventually attract and concentrate entrepreneurial activity, along with the economic value and jobs they create.

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.

Therefore, if the U.S. provides regulatory clarity for builders, domestic innovation will greatly benefit. The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), passed in the U.S. in July 2025, is a prime example.

The GENIUS Act established a regulatory framework for stablecoins (digital assets pegged to fiat currency, typically the U.S. dollar), spawning a new model: open monetary infrastructure.

After its passage, this act led to unprecedented growth and adoption, beneficial for the U.S. economy and the long-term dominance of the U.S. dollar.

When a legal framework is designed to foster both innovation and consumer protection, the U.S. can lead the way, and the world benefits.

Entrepreneurs and early adopters who believe in the promise of crypto, regardless of external perceptions, deserve a clear regulatory framework to realize their vision.

They also need a framework that acknowledges the potential of blockchain networks to drive a significant and novel technological platform shift. This shift must move beyond speculative applications fueled by poor policy, allowing people to build beyond the initial financial use case (which is already covered by existing U.S. regulations).

The CLARITY Act is tailored precisely to establish such a clear framework.

How We Got Here

The CLARITY Act isn't entirely new. Many of its concepts and principles are derived from existing commodity and securities laws. The bill has also evolved from previous legislative iterations, including two "market structure" bills originating in the House:

The 2024 Financial Innovation and Technology for the 21st Century Act, or "FIT21" (HR 4763); and the 2025 Digital Asset Market Clarity Act (HR 3633).

Similar to the current Senate bill, both FIT21 and the House version of CLARITY sought to provide a path for blockchain networks to:

· Launch blockchain networks and digital assets safely and effectively in the U.S.;

· Clarify the regulatory division between the SEC and the CFTC regarding crypto, specifically whether a digital asset is a security or a commodity;

· Ensure oversight of crypto trading platforms;

· Further protect U.S. consumers through rules governing crypto transactions.

Two years ago, FIT21 passed with overwhelming bipartisan support (279 votes in favor, 136 against, with 71 Democrats supporting it).

The House version of CLARITY passed in July 2025 with even higher bipartisan support (294 votes in favor, 134 against, with 78 Democrats supporting it).

Together, these bills sent a strong signal to the Senate: accelerate crypto market structure legislation.

The Senate version of CLARITY builds on the bipartisan momentum in the House and improves upon previous bills in several key areas (detailed below). This bill has been progressing in the Senate for several years, with the fastest pace over the past year:

· June 2022, Senators Lummis and Gillibrand first introduced the Lummis-Gillibrand Responsible Financial Innovation Act, the first bipartisan legislative proposal aimed at establishing a comprehensive regulatory framework for the crypto industry.

· July 2025, the Senate Banking Committee (the committee overseeing the SEC) released a discussion draft of the bill within its jurisdiction, merging and unifying approaches from the Lummis-Gillibrand Act and the House version of CLARITY.

· Issued a Request for Information to gather feedback and legislative solutions, aiming to balance innovation with maintaining financial stability and consumer protection.

· September 2025, based on feedback received, the Senate Banking Committee released a second discussion draft.

· 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 a market structure legislative draft within its jurisdiction.

· Today (May 14, 2026), the Senate Banking Committee just advanced its portion of the CLARITY Act during a "markup" session.

Why CLARITY Matters: Networks Are Not Companies

For over a century, building companies has been the primary driver of American innovation. This path is well-established: entrepreneurs raise capital to start a business, and upon success, generate profits to return to shareholders.

U.S. law has meticulously refined this model, specifying responsibilities and emphasizing transparency to align incentives and manage trust in founders and operators.

This framework is suitable for building companies. But it is not suitable for building networks.

The existing legal framework presupposes control by a single manager and requires this control to persist. But networks have no controlling party. Networks coordinate people, capital, and resources through shared rules, not through centralized ownership.

Forcing a framework designed for companies onto networks distorts them into corporate forms. Control becomes centralized, intermediaries re-emerge, and value is extracted from those who depend on the system.

Across the digital economy, this dynamic has spawned corporate-style networks with immense centralized power—payment systems, e-commerce marketplaces, social platforms, app stores—which capture a disproportionate share of the value created by participants.

A ride-hailing user pays $100 for a ride, and the driver gets only a small fraction. A musician creates a song streamed millions of times, receiving only pennies for every dollar generated.

Wherever corporate-style networks dominate, the vast majority of value flows to intermediaries. Traditional corporate law protects these intermediaries and their investors, but users, creators, and workers remain unprotected.

For much of the internet era, this trade-off was unavoidable. Open protocols lacked sustainable economic models to compete with the capital and coordination power behind corporate networks.

Blockchain changed this.

Blockchains, and the software protocols deployed on them, have enabled a new type of system: the blockchain network. This network is designed to be decentralized in control, operate by transparent rules, and exist as shared infrastructure owned and operated by its users.

The value of a blockchain network increases with public use and can be distributed to participants—including those at the network's edge—rather than being captured solely by a central node.

Blockchain makes it possible to "build networks that truly function like networks, not like companies."

Blockchain technology is at a critical juncture. Past platform shifts—personal computers, mobile phones, the internet—were the most significant technological innovations in human history. The emergence of artificial intelligence is rapidly becoming one as well.

But all these platform shifts ultimately led to highly concentrated power and control, where a few determine the fate of countless consumers, creators, and developers who depend on these technologies and services.

As more economic activity digitizes and more processes are shaped by AI, the question of "who controls the digital systems we depend on" becomes more critical than ever.

If this control remains centralized, so does the ability to shape outcomes, restrict access, and extract value: companies dominate how the network operates and who benefits from it.

Decentralized blockchain networks offer another path: a type of infrastructure that no single participant can easily alter, censor, or redirect.

In other words, these networks can help decentralize existing platforms, replacing them with networks possessing characteristics of digital public goods—reducing lock-in effects, dispersing control, embedding neutrality, reducing single points of failure risk, and returning ownership to users.

The CLARITY Act is designed to make this path viable.

We will share more about what CLARITY specifically means for crypto builders once it proceeds to the full Senate and updates emerge.

But if the CLARITY Act passes the next, and final, steps in the legislative process, the U.S. legal framework will finally align with the nature of blockchain networks. Builders will be able to operate transparently, raise capital domestically, and build for the long term without being forced into structural compromises due to regulatory ambiguity.

And as more projects operate within, rather than outside, the U.S. regulatory perimeter, regulators and law enforcement will gain better tools to combat the fraud and abuse that have long plagued this industry.

We have already seen what happens when crypto gets viable regulation: the GENIUS Act unleashed a wave of innovation overnight. Today, we can already see crypto integrated into several mainstream applications, from stablecoins to AI agents and beyond—and the best is yet to come.

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