a16z: How Should Crypto Founders 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: Jia Huan, ChainCatcher

The Senate Banking Committee just voted in a bipartisan manner to advance the crypto "market structure" legislation (i.e., legislation regarding 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 U.S. has distorted markets, suppressed innovation, and exposed consumers to significant risks. The CLARITY Act will put an end to this.

The Securities Act of 1933 established investor protection mechanisms, which supported a century of U.S. capital formation and innovation. The CLARITY Act has a similar significance – it represents a once-in-a-generation shift in the U.S. financial regulatory landscape, bringing enormous opportunities.

Having just passed the Senate review today, this foundational legislation, crucial for the entire crypto industry, is closer than ever to becoming law.

Startup founders, consumers, and large traditional financial institutions and investors migrating to the chain will all benefit from it.

Next, the bills from the two congressional committees will be merged into a complete bill, which will be voted on by the full Senate. If passed, it will go to the House for approval, and then, 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 piece together existing regulations to manage this industry, and this approach has been a complete failure.

This has not only caused confusion in legal interpretation and inconsistent policy stances, but has also led to severe government overreach and abuse of power.

This regulatory uncertainty has not only hindered innovation but has also provided fertile ground for bad actors. In the highly publicized negative incidents in the crypto space over the past decade, those with ill intentions could easily launch products that exploited regulatory loopholes to exploit consumers.

At the same time, responsible builders have had to face questionable "regulation by enforcement."

This uncertainty has already pushed crypto development overseas. When the U.S. fails to leave room for innovation, entrepreneurs look to other jurisdictions, including those that have already implemented more sophisticated regulatory systems.

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

Fortunately for U.S. innovation, no other jurisdiction has yet perfected the regulatory approach. But tailored regulatory systems will eventually attract and concentrate entrepreneurial activity in these regions, 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 U.S.

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 Act") passed in the U.S. in July 2025 is a prime example.

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

After its passage, this bill led to unprecedented growth and adoption, which benefits the U.S. economy and the long-term dominance of the U.S. dollar.

When a legal framework is designed to both promote innovation and protect consumers, 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 opinions, 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 the speculative applications fueled by poor policies, allowing people to build beyond the initial financial use cases (financial use cases themselves are already covered by existing U.S. regulations).

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

How We Got Here

The content of the CLARITY Act isn't entirely new. Many of its concepts and principles are derived from existing commodity and securities laws. The bill is also an evolution 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 CFTC regarding crypto, determining 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).

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

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). The bill has been advancing in the Senate for several years, with the fastest pace occurring in 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 the approaches of the Lummis-Gillibrand Act and the House version of CLARITY.

· The committee issued a request for information to gather feedback and legislative solutions, seeking a balance between fostering innovation and maintaining financial stability and consumer protection.

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

· January 2026, the Senate Banking Committee released another iteration, reflecting the results of 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 the part of the CLARITY Act under its purview during a "markup" session.

Why the CLARITY Act Matters: Networks are Not Companies

For over a century, building companies has been the primary engine of U.S. 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 been meticulously refined for this model, specifying liabilities and emphasizing transparency to align incentives and manage trust in founders and operators.

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

The existing legal framework presumes control by a single manager and requires that control to be perpetual. But networks don't have a controller. Networks coordinate people, capital, and resources through shared rules, not centralized ownership.

Forcing a company-built framework onto a network distorts it into the shape of a company. Control becomes centralized, intermediaries re-emerge, and value is extracted from those who depend on the system.

Across the digital economy, this dynamic has given rise to powerful corporate networks with immense concentrated power – payment systems, e-commerce marketplaces, social platforms, app stores – which capture a disproportionate share of the value created by participants.

When a ride-hailing user pays $100 for a ride, the driver receives only a small fraction. When a musician creates a song streamed millions of times, they receive only a few cents for every dollar of revenue.

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

For most of the internet era, this trade-off was inevitable. Open protocols lacked a sustainable economic model to compete with the capital and coordination capabilities behind corporate networks.

Blockchain changed this.

Blockchains, and the software protocols deployed on them, gave rise to a new type of system: blockchain networks. These networks are designed for decentralized control, operate according to transparent rules, and exist as shared infrastructure owned and operated by their 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 by a central node.

Blockchain makes it possible to build networks that actually function as networks, not as companies.

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

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

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

If this control continues to centralize, so too does the ability to shape outcomes, restrict access, and capture value: companies will dominate how networks operate and determine who benefits.

Decentralized blockchain networks offer an alternative path: an infrastructure that no single participant can easily rewrite, censor, or redirect.

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

The CLARITY Act is designed to make this path a viable reality.

Once the CLARITY Act proceeds to the full Senate for consideration and further updates emerge, we will share more about what it specifically means for crypto builders.

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 have better tools to combat the fraud and abuse that have long plagued this industry.

We have already seen what happens when feasible regulation is provided for crypto: the GENIUS Act unleashed a wave of innovation overnight. Today, we see crypto in several mainstream applications, from stablecoins to AI agents, and more – the best is yet to come.

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