CLARITY Act markup set for January as stablecoin rules and CFTC oversight take center stage
The White House AI and crypto policy chief David Sacks said the Senate Banking Committee will mark up the CLARITY Act in January. The bipartisan bill would split digital assets into three categories—digital commodities (under CFTC jurisdiction), investment contract assets (under the SEC) and permitted stablecoins—and create rules for exchange registration, Qualified Digital Asset Custodians (QDACs) with strict key-management, and AML/KYC compliance. Earlier House passage and recent Senate confirmations by Chairs Tim Scott and John Boozman have advanced prospects for a Senate process. Progress slowed recently due to a U.S. government shutdown and ongoing party negotiations; Democrats are seeking more time to vet market-integrity, financial-stability and ethics provisions.
Separately, debate has intensified over the GENIUS Act clause banning interest or yield on stablecoins. The Blockchain Association and 125+ industry signatories oppose broad interpretations that would extend the ban; banking groups want prohibitions to cover rewards paid by third parties and are lobbying for changes. The timeline coincides with other regulatory moves such as an OCC opinion allowing banks to execute riskless-principal crypto-asset transactions — a development that could increase traditional finance participation in crypto markets. Industry firms (Coinbase, Ripple, Kraken, Circle, a16z, Paradigm) have engaged with regulators; consumer advocates warn for stronger anti-fraud and market-manipulation protections, particularly for DeFi.
For traders: the CLARITY Act would materially reshape jurisdictional certainty (CFTC vs SEC) and compliance requirements for exchanges, custodians and stablecoin issuers. Market reaction may hinge on final language for stablecoin yields under the GENIUS Act and on whether the bill narrows or broadens regulatory scope for DeFi. Expect increased institutional on‑ramp potential if QDAC and OCC pathways are finalized, but also potential short-term volatility as stakeholders lobby amendments ahead of the Senate markup.
Neutral
The combined reporting increases regulatory clarity by delineating CFTC and SEC roles and by proposing custodial and exchange compliance standards — outcomes that generally reduce legal uncertainty and support institutional adoption in the medium term. Clarified jurisdiction and QDAC pathways, plus the OCC’s riskless-principal opinion, are constructive for market infrastructure and could be bullish over months to years.
However, short-term effects are mixed. Ongoing partisan negotiations, the stalled progress due to government interruptions, and contentious GENIUS Act language on stablecoin yields create political risk. If stablecoin yield bans are broadened, lending/reward-bearing stablecoin products and related tokens could face negative pressure. Conversely, narrow, well-defined rules would calm markets. Given these offsetting forces and likely near-term lobbying and amendment activity ahead of the January markup, the immediate price impact is uncertain, so the net classification is neutral.
Traders should watch: final Senate amendments (especially GENIUS stablecoin language), any changes to QDAC custody rules, and OCC or CFTC rulemaking that follows—each can drive short-term volatility and medium-term flows into institutional products.