Digital Asset Market Clarity Act of 2025
Floor Speech
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Mr. HILL of Arkansas. Mr. Speaker, pursuant to House Resolution 580, I call up the bill (H.R. 3633) to provide for a system of regulation of the offer and sale of digital commodities by the Securities and Exchange Commission and the Commodity Futures Trading Commission, and for other purposes, and ask for its immediate consideration in the House.
The Clerk read the title of the bill.
I rise in strong support this morning of the CLARITY Act. We have been here before, Mr. Speaker. Just last year, we passed landmark legislation, FIT21, with an overwhelming bipartisan majority to apply strong Federal standards to digital asset markets.
For more than 5 years, our committee has heard from dozens and dozens of experts, held numerous roundtables and hearings with market participants of all sizes in all segments of the market to learn more about the emerging digital asset ecosystem.
We learned about the value proposition and relevant risks associated with digital assets and the use of blockchain technology. We have heard time and time again from market participants and regulators about the need for clear regulatory guardrails.
We have talked about the need to fill those regulatory gaps that have left millions participating in crypto markets vulnerable. In fact, Mr. Speaker, both President Biden in his Executive Order 14067, and President Trump in his Executive Order 14178, identified those market regulatory gaps, asking Congress to act to fill those gaps.
In 2022, we certainly witnessed consumer harm when the Financial Services Committee heard unprecedented testimony from an expert called in to clean up the failed digital asset crypto firm FTX and the mess it left behind. In his words, never had he seen such an utter failure in corporate controls.
In its wake, then-Chairwoman Waters wisely stated: ``We need legislative action to ensure that digital assets entities cannot operate in the shadows outside of robust Federal oversight and clear rules of the road.''
If we needed actions then, we certainly need it now. We risk history repeating itself, and that is why we gather today on the House floor.
After years of bipartisan work and numerous iterations, this bill would apply rigorous rules to digital asset firms, prohibiting commingling of customer funds, and requiring capital recordkeeping and conflict of interest mitigation standards.
Importantly, the bill recognizes that decentralized finance, or DeFi, developers do not take custody of user assets nor do they control user assets. Therefore, we should not treat them in the same way that we treat centralized actors who do have custody and who do have control over assets.
It is important to note that in an Agriculture Committee hearing, the former general counsel of FTX USA himself testified: Had we the regulatory structure provided for in CLARITY applied to FTX, its story--and he goes on to say--would almost certainly have had a much different ending.
Let's ensure that we learn from the past, Mr. Speaker, the digital asset ecosystem is evolving at a remarkable pace, enabling real-time settlement of peer-to-peer transactions, initiating a renaissance in applied cryptography and laying the groundwork for the next generation of the internet.
The United States has long had the most innovative financial and technology sectors and the deepest and most liquid capital markets, but while other jurisdictions are building frameworks for the future of finance to be on-chain and digitally native, our great country, with those great characteristics, is lagging.
For too long our digital asset regime has been the worst of both worlds: regulation by enforcement, which has pushed good actors to leave the United States, and the regulatory gaps that I talked about identified in both President Biden and President Trump's executive orders that have left consumers unprotected from the bad actors.
Now, today, we have an opportunity to reverse course and reestablish the United States as the global hub for digital innovation. To do so, we must close the regulatory gaps with commonsense rules.
Mr. Speaker, the CLARITY Act does just that by leveraging the expertise of our two market regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission, to ensure wraparound oversight of digital asset markets, from initial sales, raising capital, to daily trading, it provides clarity for banks engaging in this ecosystem.
As we said in the last Congress, Mr. Speaker, these rules need to be fit for purpose for the digital ecosystem. All of us on this House floor know that the status quo is simply unacceptable. We all know American consumers and innovators deserve this clarity. They deserve better. They deserve rules of the road.
The choice before us is whether to lead in the financial markets of the future or watch the next FTX fail while we are left saying once again: Well, we have been here before.
Mr. Speaker, I urge all my colleagues to join me on both sides of the aisle and support the CLARITY Act. Let's fill these regulatory gaps with the proper Federal oversight. Let's create a competitive digital ecosystem. I support this bill, and I urge my colleagues to.
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Mr. HILL of Arkansas. Mr. Speaker, I include in the Record the CBO estimate for this bill.
ESTIMATED BUDGETARY EFFECTS OF H.R. 3633, THE CLARITY ACT OF 2025, AS POSTED ON THE WEBSITE OF THE HOUSE COMMITTEE ON RULES ON JULY 2, 2025 -------------------------------------------------------------------------------------------------------------------------------------------------------- By fiscal year, millions of dollars-- ------------------------------------------------------------------------------------------------------------- 2025- 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2025-2030 2025-2035 -------------------------------------------------------------------------------------------------------------------------------------------------------- INCREASES IN DIRECT SPENDING Estimated Budget Authority................ * 2 2 1 1 1 1 1 1 1 1 7 12 Estimated Outlays......................... * 1 2 1 1 1 1 1 1 1 1 6 11 INCREASES OR DECREASES (-) IN REVENUES Estimated Revenues........................ * * * * 1 -4 * * * * 14 -3 11 NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES Effect on the Deficit..................... * 1 2 1 * 5 1 1 1 1 -13 9 0 -------------------------------------------------------------------------------------------------------------------------------------------------------- AA*= between -$500,000 and $500,000. CBO has not completed an estimate of the effects of the bill on spending subject to appropriation.
Basis of estimate: For this estimate, CBO assumes that the legislation will be enacted in summer 2025.
Direct spending: The bill would require the Commodity Futures Trading Commission (CFTC) to share information that it collects from digital commodity exchanges with the Federal Deposit Insurance Corporation (FDIC), the Financial Stability Oversight Council (FSOC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC), upon request. The bill also would require those agencies to regulate additional entities that are subject to federal anti-money-laundering rules and to issue regulations that set capital requirements for agreements that combine multiple financial transactions.
The expenditures of the FDIC, FSOC, NCUA, and OCC are classified in the budget as direct spending. Both the NCUA and the OCC collect fees from financial institutions to offset their operating costs; those fees are recorded in the budget as offsetting receipts (that is, as reductions in direct spending). After accounting for fees collected by the NCUA and OCC, CBO estimates that, on net, enacting H.R. 3633 would increase direct spending for those four agencies by $11 million over the 2025-2035 period.
Revenues: H.R. 3633 would require the CFTC to share information with the Federal Reserve upon request. The bill also would direct the Federal Reserve to regulate additional entities that are subject to federal anti-money-laundering regulations and to issue rules for the capital requirements described above. CBO estimates that those activities would cost the Federal Reserve $7 million over the 2025-2035 period. Costs incurred by the Federal Reserve reduce remittances, which are recorded in the budget as revenues. Changes in costs for the Federal Reserve banks have historically resulted in changes to remittances during the same year. However, since fiscal year 2023, the central bank has recorded a deferred asset to account for accrued net losses from expenses in excess of income. As a result, remittances largely have been suspended. In CBO's projections, remittances from the Federal Reserve will generally be suspended until 2030, and until they resume, most changes in costs incurred by the system will not be recorded as changes in remittances.
The FSOC is authorized to assess fees on bank holding companies and nonbank financial institutions; those fees are recorded in the budget as revenues. CBO estimates that under the bill the FSOC would collect $3 million in additional fees over the 2025-2035 period to cover operating costs.
Finally, section 315 would reduce the size of the Federal Reserve's surplus fund. CBO estimates that enacting that provision would increase remittances to the Treasury by $15 million in 2035.
CBO estimates that enacting H.R. 3633 would increase revenues by $11 million, on net, over the 2025-2035 period.
Spending subject to appropriation: In addition to effects on direct spending and revenues as noted in the table, the bill also contains provisions that would affect spending subject to appropriation. CBO has not estimated those effects.
Uncertainty: CBO did not estimate any budgetary effects arising from changes to the banking system or financial markets as a result of enacting H.R. 3633. Depending on their individual design and extent of adoption, virtual currencies could enhance the efficiency of the system, cause disruption, or reduce bank deposits. Those effects are uncertain and, given their potential range, CBO cannot currently estimate their direction or magnitude.
Increase in long-term net direct spending and deficits: CBO estimates that enacting H.R. 3633 would not increase net direct spending by more than $2.5 billion in any of the four consecutive 10-year periods beginning in 2036.
CBO estimates that enacting H.R. 3633 would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2036.
Mandates: H.R. 3633 would impose private-sector and intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA). CBO estimates that the cost of the mandates would exceed the private- sector threshold but fall below the intergovernmental threshold established in UMRA ($206 million and $103 million in 2025, respectively, adjusted annually for inflation).
Private-Sector mandates: The bill would impose regulatory requirements on some entities involved in digital commodities and assets, such as large multinational businesses with market capitalizations in the hundreds of billions of dollars and with millions of U.S. consumers. Using publicly available information and information from industry sources, CBO estimates that the aggregate cost of the mandate would greatly exceed the private-sector threshold established in UMRA.
In addition, if federal financial regulators increase fees to offset the costs associated with implementing the bill, H.R. 3633 would increase the cost of an existing mandate on private entities required to pay those assessments. CBO estimates that the annual cost of the mandate would be in the millions of dollars.
Intergovernmental mandates: The bill would expand existing preemptions of state laws governing the registration of digital assets as securities. Although it would limit the application of state laws, H.R. 3633 would impose no duty on states that would result in additional spending or loss of revenue. Phillip L. Swagel, Director, Congressional Budget Office.
Mr. Speaker, the gentleman is an essential leader in our committee and also the chairman of our Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence.
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Mr. HILL of Arkansas.
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Mr. HILL of Arkansas. Mr. Speaker, may I inquire as to the time remaining.
We are here today, Mr. Speaker, because of the exceptional work by the House Financial Services Committee over a 5-year period, including under the leadership of then-Chairwoman Maxine Waters and former Chairman Patrick McHenry, gathering feedback from experts, looking at market participants, analyzing the markets, and talking to regulators. That is how we got the CLARITY Act on the floor today. It is built on the backs of that hard work.
This Chamber passed a similar bill in the last Congress with exceedingly strong, bipartisan support. Since then, the CLARITY Act has only been further refined and strengthened in terms of legal certainty and consumer protection.
This bill, Mr. Speaker, as we have demonstrated over that period of time, would prevent consumer harm like FTX.
Mr. Speaker, I support the bill. I urge my colleagues to support the bill, and I yield back the balance of my time.
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