After years of jurisdictional ambiguity, overlapping enforcement actions, and regulatory inertia, the US Congress has stepped decisively into the digital asset arena. With the passage of the Guardrails for Endogenously Native and Issued United States Stablecoins Act (“GENIUS Act”) and the momentum building behind the Digital Asset Market Structure Clarity Act (“CLARITY Act”), lawmakers are signaling that the era of regulatory improvisation in cryptocurrency markets is over. A new federal framework is emerging, one that attempts to draw clear lines around digital asset classifications, stablecoin oversight, and the roles of the Securities and Exchange Commission, Commodity Futures Trading Commission, and banking regulators.
The GENIUS Act has now cleared both chambers of Congress and is heading to the President’s desk, where it is expected to be signed into law. The CLARTY Act passed the House shortly thereafter and awaits action in the Senate. Together, the two bills represent the most coordinated legislative attempt yet to domesticate and institutionalize the United States digital asset marketplace.
GENIUS Act: Stablecoin Regulation at Last
Passed with bipartisan support, the Guardrails for Endogenously Native and Issued United States Stablecoins Act creates the first federal licensing and oversight regime tailored specifically for payment stablecoins. Long the subject of regulatory infighting between the Securities and Exchange Commission, Office of the Comptroller of the Currency, and state financial regulators, stablecoins have operated for years in a jurisdictional fog. The legislation cuts through that uncertainty.
Under the GENIUS Act, any issuer of a permitted payment stablecoin must register with a designated federal authority, such as the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, FDIC, or the National Credit Union Administration. These permitted stablecoins must be fully backed one-to-one with high-quality liquid assets and redeemable at par value. Issuers are subject to monthly attestations, anti-money laundering compliance, and prohibitions on the reuse or pledging of reserve assets.
Critically, the legislation offers a pathway for state regulated issuers to continue operating, but only if they meet or exceed the federal standards. This framework aims to harmonize oversight without stifling existing innovation or market diversity.
One of the most notable effects of the GENIUS Act is that it helps clarify, though not eliminate, the Securities and Exchange Commission’s jurisdiction over stablecoins. Properly registered issuers operating in accordance with the statute will have a strong argument that their tokens are not securities, reducing the risk of enforcement. However, the law does not resolve all ambiguity, particularly for hybrid models or algorithmic stablecoins that fall outside its defined scope.
The CLARITY Act: Jurisdictional Blueprint for Digital Assets
If the GENIUS Act addresses the monetary layer of the digital asset infrastructure, the CLARITY Act goes a step further, tackling the broader ecosystem. It aims to define digital assets within existing United States securities and commodities laws by distinguishing between digital asset securities and digital commodities.
A key innovation in the legislation is the concept of a mature blockchain system, defined as a protocol that has achieved decentralization and independence from any single developer or issuer. Tokens operating on such systems could transition from being treated as securities to commodities, thereby moving from the SEC to CFTC jurisdiction.
The statute also provides for a transitional registration system. Exchanges, custodians, and brokers dealing in digital commodities may continue operations while they complete the registration process with the Commodity Futures Trading Commission. This approach avoids the potential disruption of enforcement-driven shutdowns and offers continuity for the marketplace.
Custodial obligations are addressed through the introduction of Qualified Digital Asset Custodians. These custodians must meet capital requirements, comply with cybersecurity mandates, and segregate customer assets in a manner consistent with existing financial services norms.
