What Is the CLARITY Act? How US Crypto’s Biggest Bill Affects Traders in Africa

What to Know:

• The CLARITY Act (Digital Asset Market Clarity Act of 2025, H.R. 3633) is the most comprehensive piece of US crypto legislation ever attempted — a 309-page bill that aims to define once and for all whether a digital asset is a security or a commodity, and who regulates it.
• It passed the House of Representatives in July 2025 with a bipartisan 294-134 vote, and on May 14, 2026, the Senate Banking Committee advanced it 15-9. It still needs a full Senate vote, reconciliation with the House version, and a presidential signature before becoming law.
• The bill’s core job: draw a jurisdictional line between the SEC (which would oversee “digital asset securities”) and the CFTC (which would oversee “digital commodities”).
• It introduces a 1:1 reserve mandate for payment stablecoins (backed only by short-duration US Treasuries under 90 days, overnight repos, or central bank deposits), bans deposit-like yield on stablecoins, and folds in the GENIUS Act framework.
• For African traders, the CLARITY Act will set a global regulatory benchmark — the way MiCA did for Europe — shaping how local regulators in Kenya, Nigeria, South Africa, and Ghana write their own rules, influencing which exchanges remain accessible, and determining how global banks view crypto counterparties across the continent.

The Bill That Took a Decade 

For most of the past decade, legislation guiding and defining crypto practices in the United States was scarce. Many in the industry saw the Securities and Exchange Commission’s (SEC) manner of regulation as “regulation by enforcement.” At the same time, the Commodity Futures Trading Commission (CFTC) claimed jurisdiction over cryptocurrencies such as Bitcoin and Ethereum, exchanges, token issuers, and the like, which operated in a grey area of murky regulations. 

The Digital Asset Market Clarity Act of 2025, more commonly known as the CLARITY Act, H.R. 3633, is the United States Congress’s attempt to clear that grey area by introducing a rule book. 

Amongst other things, the bill aims to clarify which assets are securities and which are commodities, define the jurisdictions of both the SEC and the CFTC with respect to the crypto market, and set anti-money-laundering rules.   

In July 2025, the bill passed the House of Representatives with a notably bipartisan vote of 291-134 and advanced to the Senate. On the 14th of May 2026, the Senate Banking Committee advanced it with a 15-9 vote, a significant achievement. 

The bill has crossed significant hurdles, but there is more to come. To become law, the bill needs a full Senate floor vote, reconciliation with the version from the House of Representatives, and a presidential signature.

How The CLARITY Act Splits Crypto In Two

One notable aspect of the 309-page bill is its attempt to resolve the jurisdictional dispute between the SEC and the CFTC. The CFTC’s main job is to regulate commodities and their derivatives.

The SEC, on the other hand, regulates securities. One of the reasons behind the jurisdictional dispute between the SEC and the CFTC in the crypto space is the uncertainty about what qualifies as a commodity and what qualifies as a security. 

Under the bill’s proposed framework, this line is guided by decentralisation. Tokens are issued to fund the development of a project in which the promoter still controls the network, and investors expect to make a profit that passes the Howey test. This puts it under SEC jurisdiction as a digital asset security. 

Token operations on networks that have reached sufficient decentralisation, such as Bitcoin and Ethereum, where no single party controls the outcomes, fall under the CFTC’s jurisdiction as digital commodities. 

To determine what is sufficient decentralisation, the bill proposes a mature blockchain system. Token issuers could file a non-security certification with the SEC. If the SEC doesn’t object within 60 days, the token is treated as a digital commodity. 

The bill also proposes a strict 1:1 reserve mandate for stablecoins. Payment stablecoins can only be backed by short-duration US Treasuries, overnight repurchase agreements, or central bank deposits. Deposit-like yield on stablecoins would be banned. This part of the bill shows elements of the GENIUS Act, a separate bill, though they both passed the House at the same time. 

For DeFi, the bill protects non-custodial software developers, such as wallet builders and validators, from being considered money transmitters. Pure code developers would not be treated as financial institutions; however, centralised intermediaries that plug into DeFi protocols would be subject to risk management requirements. 

The bill also reinforces the US stance on anti-money laundering. The Bank Secrecy Act will regulate digital commodity brokers, dealers, and exchanges.

They would be required to operate AML programs, file suspicious activity reports with the Financial Crimes Enforcement Network (FinCEN), and comply with sanctions obligations imposed by the Office of Foreign Assets Control. 

The Africa Connection: Why Crypto Traders Here Should Care

Lagos, Nairobi, and Accra all come to mind when discussing the starting point for crypto conversations in Africa. However, legislation and guardrails set by the United States, such as the CLARITY Act, have consequences and influences beyond the borders of the US, some of which affect the African market. 

A lot of African traders use Binance, Coinbase, and other platforms, which are global businesses subject to US rules whenever they touch US persons or USD-denominated assets. 

If the CLARITY Act requires full CFTC registration and full compliance with the Bank Secrecy Act, those requirements will likely set the baseline for operational standards for all major exchanges, regardless of where their users are located.

This comes at the onset of near-global regulatory convergence. In 2022, Dubai established the Virtual Assets Regulatory Authority (VARA), dedicated to the regulation of crypto and digital assets. Soon, in 2023, the European Union followed, establishing its first comprehensive framework for crypto called Markets in Crypto Assets Regulation, MiCA. 

African regulators have not sat idly by while all of this has happened. In October 2025, Kenya’s Virtual Asset Service Providers Act (VASP Act) came into effect. Nigeria also updated its Investment and Securities Act in 2025 to include digital assets under its regulation. 

This year alone, Ghana passed its own VASP law in January, and Rwanda began establishing a virtual asset service provider (VASP) framework in May. While there are technical differences across all these frameworks, the central architecture is similar to the CLARITY Act. They define the class of assets, assign regulators, and provide licensing requirements and guidelines for intermediaries, as well as the mandate AML provisions. 

Beyond the regulatory framework is the potential impact on stablecoins. In Africa, stablecoins are used for payments and remittances within and across borders, and also as a hedge against the depreciation of local currencies. 

If the CLARITY Act’s reserve requirements and its yield ban are enforced, then stablecoins such as USDC, which are already backed by short-duration Treasuries, are structured to comply. USDT could also face pressure to restructure its reserves or exit the payment stablecoin category. Ultimately, it would affect which stablecoins are viable at scale, and, in turn, African traders and remittance users. 

There is also a potential implication for networks like Celo and Stellar, which have significant user bases and develop communities in Africa. The mature blockchain certification, if obtained, can help these networks qualify for CFTC commodity status, which then affects how they can be listed, traded, or used by institutional global counterparts. 

While all of this is considered, one must remember that the bill still has a long way to go. It requires a full Senate floor vote, which has not yet been scheduled and would still face opposition from traditional banks and labour-aligned Senate Democrats.