a16z: The U.S. Needs the CLARITY Act to Seize Standard-Setting Power for Stablecoins and Tokenization

Original Author: a16z Crypto

Original Compilation: TechFlow

Introduction: The GENIUS Act has proven that clear regulation can unleash rather than stifle innovation, driving a 50% surge in the stablecoin market in half a year and attracting $13 billion in investment. But stablecoins account for only 15% of the crypto market, and the blockchain networks that power them still lack federal rules—it's like regulating smartphones while ignoring the cellular network. The CLARITY Act aims to fill this gap, determining whether the U.S. can dominate the next generation of financial infrastructure as it did the internet.

Every generation has the opportunity to upgrade infrastructure.

The 1990s brought the internet. Policymakers feared it would disrupt existing industries and create new risks. But instead of forcing the technology into outdated regulatory frameworks, they established rules that allowed innovation to flourish while protecting consumers. The result was one of the greatest periods of economic growth in American history.

Today, we face a similar opportunity with blockchain networks. Stablecoins make payments faster and cheaper. Tokenization is modernizing capital markets. Both rely on blockchain infrastructure.

These technologies will advance whether Congress acts or not. The question is whether the U.S. will set the standards or cede this ground to others.

The GENIUS Act Proves Clear Rules Work

The GENIUS Act demonstrates what thoughtful policy can achieve. Stablecoins are digital dollars that move as easily as bits across the internet. Sending $200 from the U.S. to Colombia through traditional channels can cost over $12 and take days. With stablecoins, the same transfer costs pennies and settles in seconds.

Regulatory uncertainty has hindered stablecoin adoption for years. The GENIUS Act changed that. By establishing reserve requirements and an issuer framework, it removed all confusion and unleashed growth.

The results speak for themselves. The stablecoin market is now worth approximately $315 billion, up more than 50% from a year ago, with dollar-backed tokens becoming one of the fastest-growing channels for U.S. currency abroad. According to Visa, stablecoins processed $100 trillion in transaction volume over the past 12 months. Major institutions—including JPMorgan, Citigroup, Visa, Mastercard, and BlackRock—are deepening their engagement with blockchain infrastructure.

Crucially, the dollar is winning. Millions of people worldwide who lack convenient access to traditional dollar accounts can now hold and trade digital dollars through software wallets. Clear rules have helped anchor this new system to U.S. standards and institutions, rather than competitive alternatives.

The GENIUS Act proves that smart regulation expands markets rather than constricting them. But it only solves part of the problem.

Blockchain Networks Still Lack Rules

Stablecoins account for less than 15% of the crypto market by market cap, but they depend on the underlying blockchain networks that make up the remaining 85%, which still lack a coherent federal framework. This is equivalent to regulating smartphones while ignoring the cellular network.

The CLARITY Act corrects this.

At its core, CLARITY provides clear rules for blockchain networks and defines regulatory responsibilities for digital asset markets. It incentivizes transparency, reduces risk, and promotes competition under a common set of standards. It helps prevent the next FTX disaster by empowering regulators to oversee intermediaries using established principles from traditional finance—proper custody, segregation of client assets, and full disclosure. It also unlocks the next wave of institutional adoption.

Major companies are already moving. BlackRock has launched a tokenized fund. JPMorgan is building a blockchain-based payment system. The DTCC, which holds $114 trillion in assets, is preparing to scale tokenized securities through the Canton network. CLARITY removes barriers to entry, providing a clear path for compliant participation by traditional finance. This benefits not only the crypto industry but also consumers, investors, and the long-term competitiveness of U.S. capital markets.

The Choice Before Us

History shows that open, neutral platforms governed by clear rules create the most value. The internet succeeded because entrepreneurs knew the rules of the game. They could build, attract capital, and compete based on merit rather than regulatory guesswork. Blockchain networks deserve the same opportunity.

The dichotomy of regulation versus innovation is a false one. The GENIUS Act has already disproven it: in the second half of 2025—after GENIUS was signed into law—over $13 billion flowed into crypto startup investments, nearly double the roughly $6.9 billion invested in the pre-GENIUS first half of the year. Meanwhile, forecasts predict the tokenized asset market will grow 100-fold in the coming years. The real choice is between certainty and uncertainty, whether the U.S. will assert its leadership and build the future at home, or watch it be built elsewhere.

No law is perfect, and the CLARITY Act is no exception. The reality is that cryptocurrency currently has no consumer protections. CLARITY puts these protections in place. Like any bill, no one will get everything they want, but the version released today will move the industry forward. It reflects months of bipartisan negotiation and significant compromise from the industry. Whatever its imperfections, the CLARITY Act is decidedly better than continuing without any safeguards at all.

The decisions Congress makes this year will determine where the next era of financial infrastructure will flourish and who sets the rules. If the CLARITY Act passes, it will put America ahead once again, just as it did with the commercial internet. Inaction means innovation will migrate elsewhere, operating under frameworks designed by others.