CLARITY Act Heads to Senate Markup Jan 15; State Powers on Chopping Block
Senate Banking Committee sets January 15 markup date for the CLARITY Act, igniting a battle over state preemption and DeFi exemptions as Bitcoin hovers near $91,000.
The Senate Banking Committee has officially circled January 15 for the markup of the Digital Asset Market Clarity Act (CLARITY Act), a move that sets up a decisive confrontation between federal ambition and state-level oversight. Senate Banking Chair Tim Scott confirmed the date following discussions with White House crypto adviser David Sacks, signaling that the long-stalled market structure bill is finally moving to a public vote.
Markets reacted cautiously to the news. Bitcoin held steady at $91,190 (+1.4%), struggling to break local resistance at $92,000 as traders weigh the regulatory breakthrough against macroeconomic drag. Prediction markets on Kalshi are more optimistic, currently pricing in a 42% chance the bill becomes law before April.
The Preemption “Nuclear Option”
The markup’s focal point is not the asset classification debate, but the aggressive state preemption clause. Under the current draft, the CLARITY Act would classify “digital commodities” as covered securities for the purpose of state law, effectively stripping state regulators of their ability to impose registration requirements on exchanges and brokers.
The preemption clause means Congress is saying the regulatory map should not fracture into fifty competing versions.
This federal supremacy is designed to end the “patchwork” enforcement that has plagued the industry, but it faces stiff resistance. Consumer protection advocates warn this creates a regulatory vacuum, removing the state-level “beat cops” that often catch front-end fraud before federal agencies can mobilize. If passed, the CFTC would gain exclusive jurisdiction over registered digital commodity entities, sidelining state securities commissioners entirely.
DeFi’s Unresolved Carve-Out
The text also attempts to solve the industry’s thorniest technical problem: distinguishing “true DeFi” from centralized protocols masquerading as decentralized. The bill currently exempts non-custodial DeFi protocols from the strict intermediary rules applied to exchanges (like Coinbase or Kraken), provided they do not control user assets.
However, the definition of “control” remains a battleground. Lobbyists are pushing to ensure that holding admin keys for emergency pauses does not trigger “intermediary” status, while skeptics argue this loophole allows centralized teams to bypass compliance. Senate insiders note that amendments on this specific definition are expected during the January 15 session.
Institutional Context
The markup represents the first concrete test for the “Turf War” resolution between the SEC and CFTC. By formally assigning “digital commodities” to the CFTC, the CLARITY Act aims to dismantle the regulation-by-enforcement regime that characterized the previous administration. For institutional capital waiting on the sidelines, the passage of this bill is the primary trigger for 2026 allocation strategies. BlackRock and Fidelity have both cited “regulatory certainty” as the prerequisite for their next phase of product rollouts.
