Treasury and SEC push for Clarity Act to stop crypto innovation from moving offshore

Developers and investors are relocating crypto innovation to Abu Dhabi and Singapore to avoid the regulatory uncertainty of the U.S. market. Treasury Secretary Scott Bessent wrote in a Wall Street Journal op-ed that the benefits of domiciling in the U.S. rarely outweigh the risks when firms in other jurisdictions know how to register and operate.

Bessent and SEC Commissioner Paul Atkins are urging Congress to pass the Clarity Act to restore domestic confidence. The bill would define when a digital token qualifies as a security or a commodity, thereby establishing regulatory boundaries between the SEC and the Commodity Futures Trading Commission. It would also introduce anti-fraud and anti-money-laundering measures and set operating pathways for trading platforms.

The legislation follows the Genius Act, which President Trump signed last year to create a regulatory framework for dollar-backed stablecoins. While the House passed the Clarity Act in July, the bill is currently stalled in the Senate. The Senate Agriculture Committee advanced its portion of the bill in January, but the Senate Banking Committee scrapped a planned markup after a draft lost the support of a key industry player.

The deadlock is driven by a conflict between the banking and cryptocurrency industries over a provision of the Genius Act. Banks are pushing for a fix in the market structure bill that would prohibit stablecoin issuers from offering interest or yield payments to customers solely for holding tokens. The crypto industry argues these rewards are necessary to compete in the payments market. The Clarity Act remains stuck in the Senate.