How the CLARITY Act benefits compliance-first operators

• The Digital Asset Market Clarity Act has been added to the U.S. Senate calendar, with an expected floor vote this summer, marking significant progress for the bill codifying cryptocurrency market structure and oversight after its U.S. House passage last year.¹
  

• The bill has been hailed as the biggest regulatory bill since Dodd-Frank, codifying the rules for pension funds, insurers, asset managers, and other institutional players looking to compliantly scale their allocation into digital assets.

• The SEC and CFTC already listed AVAX as a digital commodity in March, fortifying the legal framework for both the Avalanche token and AVAX One’s digital asset holding strategy.

• If passed, the CLARITY Act will codify that as a statutory classification and further validate AVAX One’s approach, increasing the gap between compliance first-operators and less compliance-focused digital asset companies.

WHAT DOES THE CLARITY ACT DO?

The CLARITY Act codifies what financial institutions often cite as the necessary pre-requisites for large scale allocation. 

“The CLARITY Act represents exactly the kind of regulatory foundation the digital asset space has needed – not just for crypto-native companies, but for the institutional capital that has been waiting for a clear framework to engage,” says Jolie Kahn, CEO of AVAX One.

Over the last decade, institutional compliance teams have stressed the need for more regulatory clarity, requesting clearer guidelines to point to before internal investment committees can sign off. 

The result has been a market where demand exists but the infrastructure to channel it through fiduciary, audit, and custody standards does not. Regulation by enforcement has trained institutional risk officers to assume the worst-case classification, with allocations often sized down to limit exposure to a regulatory event that could not be ruled out.

The CLARITY Act provides clearer guardrails so institutional compliance teams can move forward more confidently. By converting agency interpretation into federal statute, the bill addresses the foundational questions that have kept institutional capital sidelined: who has jurisdiction, what is the asset, and what are the rules of the road.

HOW CLARITY WORKS

The CLARITY Act establishes a three-category statutory framework distributing regulatory authority across the CFTC, the SEC, and federal banking regulators.² 

For institutional allocators, the practical effects include:

• Jurisdictional clarity. The bill defines a digital commodity as a digital asset whose value is intrinsically linked to the use of a blockchain, and gives the CFTC exclusive jurisdiction over spot markets in those assets through registered intermediaries. The SEC retains jurisdiction over primary market fundraising and over digital assets that function as investment contracts.³ Compliance teams can finally model the regulatory perimeter. Risk officers can write memos that are not entirely in the conditional.
• Capital-raising pathways. CLARITY creates a tailored SEC exemption, up to $75 million over 12 months, with crypto-specific disclosure requirements covering tokenomics, source code, governance, and maturity status.⁴ The exemption lowers the bar for legitimate fundraising without leaving a perpetual securities classification overhang.
• Custody, intermediaries, and infrastructure. The bill establishes the Qualified Digital Asset Custodian standard, a defined category of custodians who are subject to supervision and examination by banking regulators, such as the CFTC and the SEC.⁵ Combined with rules for digital commodity exchanges, brokers, and dealers, this addresses the SAB 121-style accounting friction that has kept many banks and asset managers from engaging meaningfully in custody, trading, and tokenization activities.
  
  
• DeFi, tokenization, and stablecoins. CLARITY includes protections for non-custodial developers and validators, frameworks for tokenized real-world assets, and the Tillis-Alsobrooks stablecoin yield compromise embedded in Section 404. Together, these provisions support programmable money, on-chain settlement, and tokenized asset issuance without imposing the kind of catch-all securities classification that would freeze institutional engagement.

The most-contested provision in CLARITY is the Tillis-Alsobrooks stablecoin yield language in Section 404. It bars rewards on stablecoin balances that are “economically or functionally equivalent” to interest or yield on an interest-bearing bank deposit, while carving out activity-based rewards tied to transaction volume, payments, platform participation, and loyalty programs. Regulators are required to issue rulemakings defining the equivalence standard.⁶

Banks have raised legitimate concerns about implementation risk, while crypto advocates have surfaced concerns about overreach. This compromise attempts to meet them both somewhere in the middle with a workable solution (if imperfect and enforcement-dependent). It largely achieves the policy goal of preventing stablecoins from functioning as unregulated interest-bearing deposits while preserving room for genuine payments and platform innovation. 

The CLARITY Act advanced from the Senate Banking Committee on May 14 in a 15-9 bipartisan vote, with the full Senate vote expected to happen before the August recess.⁷ 

CODIFYING AVAX ONE’S COMPLIANCE-FIRST APPROACH

While CLARITY will be critical for institutional compliance and investment across digital asset markets, the most important regulatory development for Avalanche treasury strategies like AVAX One has already happened.

On March 17, the SEC and CFTC jointly issued an interpretive release identifying examples of digital commodities, including the AVAX token on the list.⁸ This agency interpretation underscores the validity of AVAX One’s approach, although the CLARITY Act would go one step further by making the commodity language a (more durable) statutory classification.

What this means operationally for AVAX One:

• AVAX One holds approximately 14 million AVAX as a digital commodity classified by joint agency action and on a path to statutory codification.⁹
  
  
• The company stakes more than 90% of those holdings under the SEC’s May 2025 staff guidance on protocol-level staking, which CLARITY would convert into a statutory safe harbor for both custodial and self-custodial staking models.
  
  
• AVAX One also operates a public validator node and generates delegation fee revenue under a framework that CLARITY would explicitly protect from securities registration where the operator does not custody or control the staked asset.

WIDENING THE GAP FOR COMPLIANCE-FIRST CRYPTO COMPANIES

For established crypto-focused public companies, the CLARITY Act is a net positive catalyst. It de-risks operations, facilitates institutional inflows, and integrates crypto into mainstream finance, in the same way that ETF approvals further solidified and boosted Bitcoin-based treasury companies. 

Regulatory clarity at the statutory level expands the universe of allocators for whom regulated Avalanche treasury exposure is procurable. Codification is a multiplier on existing regulatory clarity, making it harder to reverse the digital commodity frameworks that have already been established at the agency level.

Operators that have already been building with compliance in mind are best positioned to capitalize, and that mindset has driven AVAX One’s approach since its treasury launch in November, providing public company-level controls and transparency while serving as the institutional gateway to the on-chain economy with Avalanche.

REFERENCES

1. 1. CoinDesk. “Clarity Act clears U.S. Senate committee, on its way to a final test in Congress.” May 14, 2026. https://www.coindesk.com/policy/2026/05/14/clarity-act-clears-u-s-senate-committee-on-its-way-to-a-final-test-in-congress
   2. Congress.gov. “H.R.3633 — Digital Asset Market Clarity Act of 2025.” 119th Congress. https://www.congress.gov/bill/119th-congress/house-bill/3633/text
   3. Congress.gov. “H.R.3633, Title I — Definitions; Rulemaking; Expedited Registration.” 119th Congress. https://www.congress.gov/bill/119th-congress/house-bill/3633/text
   4. Arnold & Porter. “The CLARITY Act: A Detailed Analysis of the New Federal Framework for Digital Assets.” 2025. https://www.arnoldporter.com/en/perspectives/advisories/2025/07/the-clarity-act-a-detailed-analysis
   5. Congress.gov. “H.R.3633, Title III — Custody and Customer Protection.” 119th Congress. https://www.congress.gov/bill/119th-congress/house-bill/3633/text
   6. The Block. “Crypto bill nears stablecoin rewards breakthrough, ethics concerns resurface.” May 2026. https://www.theblock.co/post/398498/crypto-bill-nears-stablecoin-rewards-breakthrough-ethics-concerns-resurface
   7. Crypto Times. “CLARITY Act Timeline: From 15-9 Senate Win to July 4 Signing.” May 14, 2026. https://www.cryptotimes.io/2026/05/14/clarity-act-vote-timeline-what-happens-next/
   8. U.S. Securities and Exchange Commission. “Joint SEC/CFTC Interpretive Release on Digital Commodity Classification.” March 17, 2026. https://www.sec.gov/newsroom/press-releases/2026-30-sec-clarifies-application-federal-securities-laws-crypto-assets 
   9. AVAX One Technology Ltd. “AVAX One Reports First Quarter 2026 Financial and Operating Results.” May 14, 2026. https://ir.avax-one.com/news/?qmodStoryID=5506424837566309