Summary:

Context: The U.S. Congress is actively developing a robust regulatory framework to govern digital assets, aiming to provide clarity and stability to the rapidly evolving industry.

What: The House of Representatives passed the CLARITY Act, a significant step toward establishing oversight for digital assets. Concurrently, key U.S. Senate members have released a discussion draft of market structure legislation. While the two bills adopt distinct approaches to defining digital commodities, both seek to delineate the regulatory roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), ensuring a cohesive framework for digital asset oversight.

Who: Congress, the SEC, the CFTC, and participants in the digital asset industry.

Situation Overview: The Administration, Congress, and regulators continue to advance efforts to establish legal and regulatory clarity for digital assets in the United States. The recent passage of the Guiding and Establishing National Innovation for US Stablecoins of 2025 Act (GENIUS Act), on 18 July 2025 was a significant milestone and cleared the way for the more challenging task of addressing digital asset market structure legislation.

While the House of Representatives passed its version of market structure legislation, the Digital Asset Market CLARITY Act of 2025 (CLARITY Act), on 17 July 2025, in tandem with the GENIUS Act, the Senate has only recently begun the process of considering market structure legislation. On 22 July 2025, Chairman Tim Scott and several members of the U.S. Senate Committee on Banking, Housing and Urban Affairs (Senate Banking Committee), which has primary jurisdiction over the SEC and securities laws, released an initial discussion draft of a bill tentatively titled the Responsible Financial Innovation Act (RFIA), which is intended to “build on the strong foundation for digital asset legislation established by the CLARITY Act.” The discussion draft was accompanied by numerous questions to the public in a Request for Information intended to inform the draft legislation. Of note, the Senate Committee on Agriculture, Nutrition, and Forestry (Senate Agriculture Committee), which has primary jurisdiction over the CFTC and commodities laws, is expected to introduce legislation in early fall. In this insight, Patomak compares the CLARITY Act and the RFIA and discusses the outlook for digital asset market structure legislation in 2025.

In Depth

CLARITY Act

The CLARITY Act establishes three digital asset-related CFTC registration classes: digital commodity exchanges, digital commodity brokers, and digital commodity dealers. It also provides the SEC with jurisdiction over digital commodity activities and transactions on alternative trading systems and national securities exchanges. The CLARITY Act also prohibits digital assets sold pursuant to investment contracts from being deemed investment contracts themselves.

RFIA

The RFIA seeks to clarify the role of the SEC in its oversight of digital assets. The RFIA introduces a new term: ancillary asset. The RFIA prescribes a process by which an ancillary asset originator can self-certify that an “ancillary asset” does not provide certain financial rights and thus is not a security. The RFIA also prescribes disclosure requirements for ancillary assets based on gross proceeds and trading volume.

The RFIA requires the SEC to promulgate new rules to:

1. exempt certain offers or sales of “ancillary assets” from SEC registration, including offers or sales that do not exceed $75 million in gross proceeds per year over four years; and
2. specify clear criteria and definitions governing the term “investment contract.”

Differences Between the CLARITY Act and the RFIA

Definition of a Digital Asset

The CLARITY Act broadly defines a digital asset as, “any digital representation of value which is recorded on a cryptographically-secured distributed ledger or similar technology.” In contrast, the RFIA adopts a narrower definition, explicitly excluding assets that represent ownership or control over non-digital assets. As a result, tokenized securities or digital representations of real-world assets would not qualify as digital assets under the RFIA, unlike the broader scope of the CLARITY Act.

Ancillary Assets vs. Digital Assets

The RFIA introduces the concept of an ancillary asset, defined as, “intangible, commercially fungible asset, including a digital commodity, that is offered, sold, or otherwise distributed to a person in connection with the purchase and sale of a security through an arrangement that constitutes an investment contract.” However, an ancillary asset does not grant certain financial rights like debt, equity, liquidation rights, interest, or dividends in the underlying asset. These ancillary assets are expected to fall under CFTC oversight, with forthcoming Senate Agriculture Committee legislation expected to clarify the CFTC’s role.

The CLARITY Act, on the other hand, establishes a framework to classify digital assets as either securities or commodities based on the maturity of the associated blockchain system, determining whether they are regulated by the SEC or CFTC.

Ancillary Asset and Mature Blockchain Certification

Under the RFIA, an ancillary asset originator must file a self-certification with the SEC and make public disclosures confirming that the asset does not confer certain ownership rights (as discussed above) to the underlying asset. The SEC has 60 days to review this certification. If no objections are raised, the ancillary asset would be regulated by the CFTC.

The CLARITY Act defines a mature blockchain system as a blockchain system, together with its related digital commodity, that is not controlled by any person or group of persons under common control. Digital assets tied to such systems are classified as digital asset commodities, which shifts their oversight to the CFTC.

Disclosure Requirements

The CLARITY Act mandates semiannual disclosures to the SEC for maturing blockchains, covering the blockchain’s state, efforts of the issuer and related persons, and financial information related to the blockchain. Once a blockchain is certified as mature, the issuer must publicly disclose governance, financial, and functionality information at a frequency set by the SEC.

In contrast, the RFIA ties disclosure requirements for ancillary assets to specific thresholds:

1. either aggregate value raised by the ancillary asset originator through the offer, sale, or distribution of the ancillary asset exceeds $5,000,000; or
2. the cumulative spot trading volume of the ancillary asset exceeds $5,000,000 in a 12-month period following the first date of its offering. If either threshold is met, the originator must publish SEC-prescribed disclosures, including details on experience, prior issuances, assets and liabilities, transactions involving related persons, future plans, and other economic data.

Similarities between the RFIA and the CLARITY Act

The CLARITY Act and the RFIA share significant conceptual alignment, reflecting a common approach to regulating digital assets. Both bills focus exclusively on spot market transactions, omitting any discussion of digital asset derivatives. They distinguish between primary and secondary market transactions, clarifying that secondary transactions do not constitute investment contracts, and explicitly exclude non-fungible tokens from the definition of digital assets.

Both bills modernize recordkeeping by recognizing distributed ledger records as sufficient to meet SEC and CFTC books and records requirements. However, they maintain strict compliance obligations for record retention, audit trails, and regulatory verification.

Importantly, both protect blockchain developers and service providers from being classified as money transmitters or requiring money transfer licenses. This applies to those who:

1. develop or distribute software for building or maintaining blockchain systems;
2. provide hardware or software for secure digital asset storage; or
3. offer support to sustain blockchain services.

Both bills also provide a regulatory carveout for airdrops, though they use different terminology: the CLARITY Act refers to these as end-user distributions, while the RFIA calls them gratuitous distributions. In both cases, exemptions apply to digital asset distributions involving only “nominal” consideration, a term left undefined in both legislative texts.

Looking Forward

As noted above, the Senate Banking Committee published a thirty-five question Request for Information that covers a wide range of topics including regulatory transparency, investor protection, trading venues and market infrastructure, custody, and federal preemption, among other areas. Stakeholders are asked to submit feedback on the RFIA by 5 August 2025.

In line with the Senate Banking Committee’s jurisdiction, the RFIA focuses on issues pertaining to the securities laws and the SEC. It is anticipated that the Senate Agriculture Committee will introduce market structure legislation addressing the CFTC’s role in overseeing digital asset commodities and digital asset commodity intermediaries in early fall 2025. The respective committees will then need to work together to advance comprehensive legislation to the full Senate for consideration and passage. If the Senate passes its version of market structure legislation, differences between the House and Senate bills will need to be reconciled. Reconciliation can occur through a formal conference between the House and Senate resulting in a final bill being introduced and then sequentially passed by both chambers or, alternatively, by using any Senate-passed legislation as the final bill for House consideration, as was done with the GENUIS Act. Considering the above factors and the Senate’s upcoming recess, it is expected that a Senate version of digital asset market structure legislation will not be passed until late 2025 or early 2026, if at all. In alignment with the White House’s stance on cryptocurrency legislation, the Administration may urge Congress to act more swiftly in passing digital asset market structure legislation.

Put Patomak’s Expertise to Work

Our team brings extensive regulatory experience and a deep understanding of the intersection between traditional financial institutions and crypto-native platforms. We engage with clients across the continuum of preparedness to undertake novel activities, from partnering on strategy development to implementing safe and sound risk management practices. Our strategy and advisory work include exploring crypto-related business options in the fast-evolving regulatory environment, weighing various regulatory and licensing frameworks, and performing enhanced due diligence for strategic partnerships and acquisitions. Additionally, Patomak has guided firms in building internal capabilities to align with regulatory expectations, from compliance infrastructure to obtaining regulatory charters and licenses and enhancing governance frameworks.

If Patomak can support your firm in navigating the evolving regulatory environment and achieving your strategic and compliance objectives, please reach out to Kathy Casey at kcasey@patomak.com or Sudhir Jain at sjain@patomak.com.