White Paper Series — Vol. 3 of 5

The CLARITY Act: The SEC/CFTC Jurisdictional Split and What It Resolves

The Problem CLARITY Is Built to Solve

For a decade, digital asset firms operated under a jurisdictional turf war between the SEC and CFTC, with no statute drawing a clear line. The result was regulation by enforcement. CLARITY's core function is to end that ambiguity by statute rather than by settlement.

The Split, As Drafted

The Act grants the CFTC exclusive jurisdiction over digital commodity spot markets. The SEC keeps existing jurisdiction over investment-contract assets. The difficulty is almost entirely in how the bill defines the line between the two categories.

Ancillary Assets and Regulation Crypto

A qualifying issuer may raise the greater of $50 million per year over four years, or 10 percent of the outstanding value of its ancillary assets, without full SEC registration, capped at $200 million in gross proceeds, subject to initial and semi-annual disclosure.

Network Tokens and the Rebuttable Presumption

A network token carries a rebuttable presumption of non-security treatment unless the originator or an intermediary certifies otherwise to the Commission. Once entrepreneurial or managerial effort has genuinely ended, the originator can certify that fact and exit SEC disclosure obligations.

The DeFi Title and Tokenization

A separate title clarifies how a person or control group behind a DeFi protocol can register, with disclosure, recordkeeping, and BSA/sanctions obligations for intermediaries. The bill also authorizes banks and credit unions to use digital assets in already-permitted activities and creates a joint CFTC-SEC micro-innovation sandbox.

The March 17, 2026 Joint Interpretation: Administrative Clarity Ahead of Statute

Separately from the bill itself, the SEC and CFTC jointly issued an interpretive release on March 17, 2026 (Release Nos. 33-11412 and 34-105020) that moved a meaningful share of CLARITY's intended function into effect administratively, ahead of any floor vote. The release established a five-category taxonomy, digital commodities, digital collectibles, digital tools, stablecoins, and digital securities, and explicitly named sixteen crypto assets, including Bitcoin, Ethereum, Solana, and XRP, as digital commodities rather than securities. Ethereum's proof-of-stake validation rewards were specifically characterized as compensation for network security services rather than profits from managerial effort, resolving a multi-year point of dispute. Solana and XRP, both previously subject to enforcement-era uncertainty over concentrated early allocations, are named commodities under this release; the open question for both is no longer classification but ongoing decentralization drift, whether concentration creeps back above the levels that supported the designation.

What the Interpretation Does and Does Not Settle

This is binding interpretive guidance from both agencies, a meaningfully stronger signal than prior staff-level statements, but it is still administrative interpretation, not statute. A future Commission can revise it. CLARITY's function, if enacted, is to convert this interpretive taxonomy into durable federal law that a future agency cannot unilaterally unwind, which is precisely why industry groups have continued pushing for statutory passage even after the March interpretation reduced some of the day-to-day uncertainty.

Institutional Reading

A token or protocol built toward the ancillary asset and network token framework, disclosure-ready and certification-ready, is better positioned regardless of which disputes delay final passage. The March interpretation has already de-risked the sixteen named assets for classification purposes; it has not made that de-risking permanent, and it says nothing about assets not on that list. This paper describes bill text and current agency interpretation, not enacted law, and the two should not be conflated. See the companion legislative status paper for current standing on the statute itself.