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House Financial Services hearing spotlights Clarity Act to define SEC, CFTC roles for digital assets
Summary
Lawmakers and witnesses told the House Financial Services Committee the Clarity Act would fill regulatory gaps by distinguishing issuer disclosures from market oversight, but several witnesses warned the bill needs work on definitions, a capital-raising exemption and agency funding before enactment.
The House Committee on Financial Services convened a hearing titled “American Innovation and the Future of Digital Assets: From Blueprint to a Functional Framework” to examine the Clarity Act and whether it provides a workable market-structure framework for digital assets. "This hearing's titled American Innovation and the Future of Digital Assets from Blueprint to a Functional Framework," Chairman French Hill said in his opening remarks.
The bill would draw jurisdictional lines between the Securities and Exchange Commission and the Commodity Futures Trading Commission, directing the SEC to retain issuer-disclosure authority while giving the CFTC responsibility over spot markets for defined "digital commodities." "The bill will do so by providing statutory definitions to key concepts and terms as well as delineating what's in the remit of the SEC and what's in the remit of the CFTC," former SEC commissioner Elad Roisman said in his testimony, describing the draft as “a significant step forward.”
Supporters and industry witnesses told the committee the proposal is aimed at removing uncertainty that has driven projects and engineers offshore. Vivek Raman, cofounder and CEO of Etherealize, said the draft’s scope and the proposed maturity test would let projects raise capital and “ensure that the payoff stays here with US jobs, US tax revenue, and US technological leadership.” Raman cited industry scale on Ethereum, saying "$140,000,000,000 of stablecoins, 10 billion dollars of real useful tokenized assets, and institutional grade financial applications live on Ethereum." He and other witnesses argued that clarity, paired with fit-for-purpose disclosure rules, would allow both retail participation and institutional engagement.
Former CFTC chairman Russell Benham recommended using principles from the Commodity Exchange Act—registration, surveillance, books and records, and capital requirements—to bring spot commodity-style trading into a regulated framework. "A core component of the CFTC's regulations ... is around registration of every entity within the trade cycle," Benham told the committee, noting the bill creates a pathway for registration of exchanges, brokers and custodians. Benham and other witnesses repeatedly urged Congress to fund regulators adequately if it gives them new responsibilities. "The CFTC is an agency with huge responsibilities but a very small budget," Benham said.
Several witnesses commended provisions that reassert anti‑fraud and anti‑manipulation protections, and the bill’s joint rulemaking mandates for the SEC and CFTC on technical definitions and market functioning. At the same time, witnesses raised concerns about a proposed capital-raising exemption tied to a “maturity test” for blockchains and about the potential breadth of carve-outs for certain decentralized finance (DeFi) activity. Tim Massad, former CFTC chair, warned that broad exemptions could be “massively ... immediately” gamed by sophisticated legal structuring if the criteria are vague.
Committee members said next steps include continued negotiation, technical edits and a markup. Several members and witnesses said they support a legislative solution but urged clarifications on the maturity test, the scope of digital commodities, enforcement tools, and the resources regulators would need to implement the framework. "These are the questions that everyone's asking," Roisman said, "Am I scoped in or out?"
