Tao Zhu, Golden Finance

Abstract: On May 14, 2026, the U.S. Senate Banking Committee passed the CLARITY Act (Cryptocurrency Market Structure Act) with 15 votes in favor and 9 votes against, and the bill was officially submitted to the full Senate for a vote. If the bill is ultimately passed, it will mean clearer regulatory protections for cryptocurrency holders.

1. The U.S. Senate Banking Committee passed the CLARITY Act

On Thursday, the U.S. Senate Banking Committee voted to advance the CLARITY Act.

According to public information, the bill was passed with 15 votes in favor and 9 votes against, and has been submitted to the full Senate for a vote. Cross-party support, including from two Democratic congressmen, makes the market believe that the bill has a high probability of passing.

U.S. Senate Banking Committee Chairman Tim Scott said: "This bill will not stand on the side of traditional finance or new technologies, but on the side of ordinary Americans."

Affected by this good news, BTC increased by 2% in 24 hours, and was reported at US$80,914.04 as of press time; ETH increased by 0.7% in 24 hours, and was reported at US$2,267.64 as of press time; other cryptocurrencies were also mainly on the rise.

Coinbase’s stock price once rose by more than 7%, and was trading at $212.01 as of press time.

2. Five key provisions of the CLARITY Act

Stablecoin rewards

The most controversial provisions of the bill involve how cryptocurrency exchanges and other cryptocurrency players pay rewards into stablecoins.

The bill prohibits the payment of rewards to idle stablecoin balances similar to bank deposits, but allows the payment of rewards to transaction-based activities such as payments made through stablecoins.

The SEC, Commodity Futures Trading Commission, and Treasury Department will be required to jointly issue rules to implement this provision.

Banks opposed the provision, saying it could lead to an outflow of deposits from the regulated banking system. Cryptocurrency companies have said that prohibiting third parties such as cryptocurrency exchanges from paying stablecoin interest would constitute anti-competitive behavior.

Anti-money laundering

The bill would require all digital commodity exchanges, brokers and dealers to be considered financial institutions under the Bank Secrecy Act, which would subject them to anti-money laundering, customer identification and due diligence requirements. This would subject cryptocurrency companies to largely the same anti-money laundering regulations as banks, whereas some cryptocurrency companies had previously argued that they were not subject to the same rules.

U.S. Securities and Exchange Commission (SEC) financing exemption

Cryptocurrency companies can raise up to $50 million per year and up to $200 million in total without having to register with the SEC like other companies.

Crypto tokens linked to investment contracts can still be sold under this regime, but with a reduced regulatory burden compared to securities.

This exemption would limit the SEC’s ability to deem most token sales illegal securities offerings. The regulator has taken this position before during the Biden administration, and many courts have upheld it.

Decentralized Finance

Many major cryptocurrency platforms are "decentralized," meaning users can interact directly with each other, unlike traditional exchanges.

Decentralized platforms argue that they cannot comply with bank-like rules, which mostly assume the existence of a legal entity that sits in the middle of a transaction and holds customer funds.

The Clarity Act will define when a platform can reach the standard of being fully decentralized. If a platform fails to meet that standard, it will be considered a financial institution and required to report suspicious activity and monitor transactions like a bank.

A platform will not be considered "decentralized" if it has the ability to ban users, or has private permissions or hard-coded special privileges that other users do not have.

Tokenization

Tokenization generally refers to the process of converting financial assets, such as stocks, bonds, and even real estate, into crypto-assets. Cryptocurrency companies have been investing in tokenized stock trading ahead of the SEC expected to allow companies to experiment with blockchain-based stock trading.

The bill would clarify that placing a security on a blockchain does not exempt it from securities laws. It also asked the SEC to further study the regulatory treatment of tokenized securities.

The bill would also mandate that tokenized securities generally be treated the same for regulatory purposes as the underlying securities they represent.

3. What are the main controversies surrounding the CLARITY Act

1. Stable currency interest payment issue

On the issue of stablecoin interest payments, there are huge differences between Wall Street banks and stablecoin-related business companies.

The updated bill allows cryptocurrency companies to offer stablecoin rewards and benefits to users while strictly protecting traditional bank deposits from competition. Under the new terms, issuers like Circle can integrate stablecoins into lending, payments and decentralized finance protocols without entering the regulated banking space. Interest-bearing accounts at banks still enjoy protected status.

But major U.S. banking groups are opposing the new stablecoin rules in the CLARITY Act, warning that the latest proposals do not go far enough to protect bank deposits. On May 4, the five major banking industry associations (American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum and American Independent Community Bankers Association) issued a joint statement criticizing the loopholes in the reward mechanism based on "term, balance and holding period".

Banks believe that if stablecoins start to offer returns similar to savings accounts, customers may shift their deposits away from traditional banks. This, in turn, could affect credit activity across the economy. "Studies show that yield-generating stablecoins could reduce all consumer loans, small business loans, and agricultural loans by a fifth or more. Congress must get this right."

2.DeFi definition dispute

The CLARITY Act attempts to define which protocols are true DeFi. However, there is a lack of unified standards for how to define decentralization.

Some Democratic congressmen believe that many so-called DeFi projects are actually just "financial institutions disguised as decentralized." The bill may bring about problems such as money laundering, sanctions evasion, and hackers transferring funds. The Democratic Party believes that if DeFi is not regulated, it may become an important tool for North Korean hackers, terrorist financing, and sanctions circumvention in the future. But Republicans ultimately rejected the amendment. There is an obvious rift between the two parties on the DeFi issue.

3. Moral Clause Issues

U.S. Senator Kirsten Gillibrand (D-N.Y.) has said that the CLARITY Act is unlikely to pass the Senate without an ethics provision prohibiting senior government officials from being associated with cryptocurrencies.

"We must not allow members of Congress, senior government officials, the President or the Vice President to use their insider connections to profiteer from these industries. This is the worst form of power-for-money; this is the most egregious campaign finance violation; and this is a violation of the Constitution."

This also reflects the concerns of Democrats: Trump is deepening his ties to cryptocurrency and profiting from it.

White House adviser Patrick Vitter stressed that ethics provisions should apply to all public officials, rather than applying them selectively, and stressed that fairness must be the overriding principle in negotiations.

Despite the ongoing controversy over the ethics provision, Republican committee members ultimately decided not to include such language in this version of the bill, arguing that ethics considerations were beyond the committee's purview and that such language could be added through an amendment in the full Senate.

This is also an important reason why cross-party support for the current bill is still unstable.

4. How far is it from the CLARITY Act actually taking effect

The CLARITY Act still has the following milestones before it takes effect:

First, a full Senate vote is required, which requires more cross-party support. The bill requires the support of at least 60 senators (out of 100) to pass, meaning at least seven Democratic senators will need to join all Republican senators.

But New York Senator Kirsten Gillibrand and other Democrats said they would not support the final bill without a "conflict of interest" provision that would limit government officials, including the Trump family, from profiting from the cryptocurrency industry. This provision is not included in the latest version as it is outside the jurisdiction of the Banking Commission and needs to be added at a later stage. White House officials have publicly stated that they will not accept the bill targeting the president, making the bill most likely to conflict before the full Senate vote, which industry advocates hope to see before lawmakers resume their August summer recess.

The second step is to coordinate the Senate and the House of Representatives on the final version. The reason is that many frameworks of the CLARITY Act are directly inherited from FIT21. FIT21 is equivalent to the House of Representatives version; CLARITY is equivalent to the Senate version. The U.S. Constitution requires that the bill ultimately submitted to the president for signature must be "completely consistent in text." Therefore, if the House of Representatives passes FIT21 and the Senate passes CLARITY, but there are differences in content, it must enter the consultative committee for unification.

Finally, the CLARITY Act must be signed by the president before it becomes law.

5. What do industry insiders think about the passage of the CLARITY Act?

• U.S. Senate Banking Committee Chairman Tim Scott:Advancing this bill is critical to providing guidance and standards for the cryptocurrency industry. “For years, the digital frontier has been in a regulatory gray area. Developers, entrepreneurs and investors have been left feeling lost. They have faced confusion and enforcement action when governments should be setting clear rules.”
  

• Elizabeth Warren, the top Democrat on the Senate Banking Committee, expressed concern during the deliberations that the bill is too friendly to cryptocurrency companies: "Our job is to serve the American people, not to advance bills that benefit the cryptocurrency industry that would endanger American consumers, American investors, our national security and the financial system."

• Senator Pete Ricketts, Republican of Nebraska, a member of the U.S. Senate Banking Committee, said: "As a senator, I am proud to vote for the CLARITY Act. This bill establishes a clear and enforceable regulatory mechanism for the digital asset market, will combat illegal financial activities and national security threats, and promote innovation."

• U.S. Commodity Futures Trading Commission Chairman Mike Selig celebrated the passage of the bill, calling it "an important step toward making the United States the global capital of cryptocurrency, which will allow the United States to continue to remain a global center for digital asset innovation in the coming years." He emphasized that the bill establishes clear standards for distinguishing securities and commodities, establishes transparent rules for digital asset transactions, and marks the end of the "enforcement regulation" model that has long been criticized by critics.

• Senator Mark Warner, D-Va.: "I think I'm in cryptocurrency purgatory right now, but I'm looking forward to eventually making it work."

Attachment: CLARITY Act (Digital Asset Market Clarity Act) original text

Core points (TOPLINE)

The "Market Clarity Act" proposed by this committee establishes a clear protection mechanism for digital asset market participants so that ordinary Americans can safely participate in the digital asset market.

Chapter 1 General Provisions and Information Disclosure (TITLE I)

Article 101 Abbreviation

This law may be cited as the "Digital Asset Market Clarity Act of 2025" (Digital Asset Market Clarity Act of 2025), referred to as the "CLARITY Act".

Article 102 Disclosure Requirements for Certain Related Asset Transactions

• Definition "Associated Assets": Refers to network tokens whose value depends on the entrepreneurial or management efforts of the issuer.

• Disclosure obligations: Transactions related to related assets are required to submit initial disclosure and semi-annual continuous disclosure; the token itself is still considered a commodity.

• Rebuttable presumption: Network tokens are presumed to be related assets by default, unless the issuer or digital asset intermediary submits written certification to the SEC to prove with reasonable evidence that the token is not a related asset.

• No major non-public information commitment: The issuer must confirm that it does not hold major non-public information (except when the intermediary reasonably determines that it cannot provide it).

• Termination Certification: The issuer or intermediary may certify that the "entrepreneurial/management endeavor has been terminated" and will no longer need to meet SEC disclosure obligations.

Article 103 Exemptions and Rulemaking for Related Asset Transactions (Cryptocurrency Regulations)

• Regulation Crypto: If related assets are issued/sold in the form of investment contracts, they can be exempted from SEC registration and encryption regulations will apply.

• Fundraising limit:

• Maximum amount raised in a single calendar year: US$50 million, sustainable for 4 years;

• Or 10% of the total market value of circulating related assets (whichever is higher);

• Total fundraising cap from a single issuer: US$200 million (gross revenue).

• Prerequisites for compliance: The initial disclosure and semi-annual disclosure requirements of Section 102 must be complied with.

Article 104 Restrictions on insider resale of related assets

• 12-month lock-up restriction: The number of related assets resold by company insiders within 12 months is limited to prevent market manipulation and insider trading, and to avoid "smashing the market" to lower prices.

• Decentralized governance exemption: Decentralized governance systems such as DAO are not considered a single control subject; their regular management actions (even if performed by individuals) do not constitute centralized control; preset, transparent, and limited network security emergency measures (without a single subject leading) are not considered collaborative control.

Article 105 Legal Characteristics of Network Tokens

• Non-Securitization Determination: The SEC is required to develop rules that provide that network tokens do not constitute a disqualifying financial interest (i.e. are not considered securities) if the value of the asset is derived primarily from a distributed ledger system.

• Judicial precedent exemption: If before this law takes effect, a U.S. court has made a non-appealable final judgment that a certain digital asset is not a security, the SEC may no longer characterize it as a security.

Rule 106 SEC Immunity Preserved

Preserve the SEC's immunity authority to provide tailored exemptions from securities laws for specific entities, securities or transactions.

Article 107 Modernization of record-keeping requirements

SEC must amend its rules to allow the use of distributed ledger data as legal records and adapt to the characteristics of blockchain technology.

Article 108 Modernization of Securities Supervision of Digital Asset Activities

• Rule updates: The SEC must revise its rules to eliminate outdated, unnecessary, or unduly burdensome digital asset regulatory requirements.

• State law preemption exclusion: Some state securities law requirements are superseded by federal law, but states’ anti-fraud powers remain.

Article 109 Applicability of Insider Trading Law

Transactions in related-asset securities continue to be subject to existing federal insider trading laws.

Article 110 Scope of Application of Securities Investor Protection Corporation (SIPC)

Clearly: Digital commodities are not “securities” and do not apply to the Securities Investor Protection Act (SIPA).

Chapter 2 Anti-Illegal Finance (TITLE II)

Article 201 Bank Secrecy Act and Sanctions Law Applicable

Digital commodity brokers, traders, and exchanges are defined as financial institutions and are subject to the Bank Secrecy Act, and must establish **anti-money laundering (AML), customer identification (KYC), and customer due diligence (CDD)** systems.

Article 202 Digital Asset Review Standards

The Treasury Department, in conjunction with federal bank regulators, develops risk-based review standards to assess the implementation of ** reporting obligations, anti-money laundering compliance, and counter-financing of terrorism (CFT)** related to digital assets of financial institutions.

Section 203 Prevention of Unlawful Financial Cooperation Act (Pilot Program)

Establish a public-private partnership pilot to allow the private sector to share illicit financial clues, threat intelligence, and emerging risk data with federal law enforcement agencies.

Section 204 Fintech Protection Act

Establish an independent anti-terrorism and illegal finance fintech working group, whose members include senior officials from the Ministry of Finance, the Ministry of Justice, the FBI, and representatives from the private sector; it will study the patterns of digital assets being used for terrorist financing and illegal activities, and propose anti-money laundering and anti-illegal financial improvement plans.

Article 205 Digital Asset ATM (kiosk) Regulatory Framework

Establishing a unified federal regulatory bottom line for cryptocurrency ATMs, including:

• Fraud prevention measures;

• New user transaction limit;

• Mandatory customer service hotline;

• Customer fund protection and transaction transparency requirements.

Article 206 Annual Research Report on Illegal Use of Digital Assets

The Ministry of Finance and the Ministry of Justice will complete and submit a report to Congress within one year, analyzing how overseas terrorist organizations and transnational criminal groups use digital assets to conduct illegal activities, and making recommendations for the SEC and CFTC to strengthen compliance and enforcement.

Chapter 3 Responsible Innovation in Decentralized Finance (DeFi) (TITLE III)

Article 301 Applicable Rules for the Supervision of DeFi Transaction Agreements

• Definition of non-decentralized protocols: Focus on control rights, discretion, and protocol modification/review capabilities; protocols with the above powers are identified as "non-decentralized."

• Decentralized governance exemption: The decentralized governance system alone does not constitute a single controlling subject; the core infrastructure (nodes, validators, relays, security committees) is not considered a protocol controller (when no single subject actually controls it).

• Rule formulation: The SEC and the Treasury Department formulated rules to clarify how non-decentralized protocol controllers must comply with the compliance requirements of securities intermediaries.

• The "Bank Secrecy Act" applies: non-decentralized protocols that require registration (identity of financial institutions), existing anti-money laundering and anti-terrorist financing obligations apply according to the nature of the activity.

Article 302 Illegal financial obligations of distributed ledger messaging systems

• Definition: Refers to the web front-end that provides users with access to blockchain applications/DeFi protocol operations (excluding core infrastructure such as protocols, nodes, and wallets).

• Regulatory guidance: The Treasury Department issues sanctions, anti-money laundering, and anti-terrorist financing guidance to restrict front-end systems owned/operated by U.S. entities.

Article 303 Special Measures for Specific Fund Transfers

Authorizes the Treasury Department to establish new “special measures”: If an overseas jurisdiction, institution or transaction type is deemed to be a high risk for digital asset money laundering, the Treasury Department can prohibit or restrict U.S. financial institutions from carrying out related fund transfers.

Article 304 Annual Report of Overseas Stablecoins

The Ministry of Finance releases a report every year to assess whether overseas stablecoins that rely on U.S. debt and have large-scale circulation pose a major illegal financial threat; the content includes:

• Illegal financial risk ratings of each overseas stable currency;

• Evaluation of the effectiveness of the issuer’s internal controls;

• Illegal transaction scale and data related to the US financial system;

• Other key risk analyses.

Article 305 Safe Harbor for Temporary Freezing of Suspicious Transactions

• Voluntary freezing rights: Licensed payment stablecoin issuers and digital asset service providers may implement short-term temporary freezes on suspicious transactions upon written request from law enforcement agencies.

• Liability Protection: Those who comply with the freeze in good faith and fulfill their notification and recording obligations are immune from federal/state civil lawsuits.

• Procedural requirements: Keep freezing records for 3 years; promptly notify customers and law enforcement agencies (or FTC); freezing is a voluntary act and does not exempt other legal obligations; existing SARs, asset seizure, and sanction powers are fully retained.

Article 306 DeFi Transaction Agreement Voluntary Cybersecurity Plan

• NIST Certification Program: Operated by the National Institute of Standards and Technology (NIST), DeFi protocols can participate on a voluntary basis and be evaluated on network security, auditing, and code transparency standards.

• Standard development: NIST develops DeFi-specific standards and best practice guidelines (updated regularly) through public opinion solicitation.

• Compliance Marking: Compliance agreements may use the NIST-issued Compliance Certification Mark; federal agencies consider participation in certification as evidence of good-faith compliance (and do not supersede state law).

Article 307 Revision of the Definition of Financial Instruments (Bank Secrecy Act)

Include digital assets into the definition of “financial instrument” under the Bank Secrecy Act; the Treasury Department can issue regulatory guidance on self-custody wallets, but it cannot mandate the collection of non-customer/counterparty personally identifiable information (PII) and does not weaken federal enforcement powers.

Article 308 Risk Management Standards for Digital Asset Intermediaries

• Risk control obligations: Before routing/executing transactions through DeFi protocols, digital asset intermediaries must establish and improve a risk management system, covering:

• Anti-money laundering, anti-sanction circumvention, anti-fraud;

• Prevention of market manipulation;

• Operational and cybersecurity risks;

• User-facing ** plain-language risk disclosure **;

• Blockchain analysis tool deployment and risk response mechanism.

• Joint enforcement: SEC, CFTC, Treasury, FinCEN, OFAC jointly formulate and enforce standards; Treasury is responsible for anti-money laundering/anti-sanctions, and market regulators (SEC/CFTC) are responsible for remaining compliance; existing enforcement powers are fully retained.

Article 309 Digital Asset Mixers (Mixers/Tumblers) Research Report

The Treasury Department submits a detailed report to Congress, including:

• Technical principles of coin mixer;

• Illegal/legal usage ratio and scale;

• Exchange and bank risk exposure;

• Comparison of regulations in various countries;

• Recommendations for legislative and regulatory improvements.

Article 310 Risk Study of Intermediaries in Overseas Jurisdictions (GAO)

The U.S. Government Accountability Office (GAO), in conjunction with the Department of the Treasury, will complete a report within one year to assess the risks of overseas digital asset intermediaries serving U.S. users in low-regulation jurisdictions and propose regulatory and legislative response plans.

Article 311 Research on the Activities of Foreign Counterparts (Treasury Department + GAO)

The Treasury Department and GAO submitted reports to key congressional committees to analyze the digital asset intermediary risks associated with foreign counterparties, including:

• Do foreign governments collect U.S. transaction data?

• Whether the intermediary intellectual property is stolen;

• Confidential attachments can be attached.

Article 312 Research on Smart Contract Network Security Standards (Ministry of Finance)

The Ministry of Finance, in conjunction with CISA, NSA, and NIST, will complete a report within one year to study network security standards for digital asset smart contracts, custody, key management, and deployment, and propose legislative recommendations (confidential attachments may be attached).

Article 313 Joint Research on DeFi Financial Stability Risks

The Ministry of Finance, the Federal Reserve, the SEC, and the CFTC jointly study the functions and risks of DeFi protocols in the financial system and regularly submit reports to Congress (terminated after 4 consecutive periods).

Chapter 4 Responsible Innovation in the Banking Industry (TITLE IV)

Article 401 Digital Asset Activity License

Amend the Bank Holding Company Law, the National Bank Law, etc. to clarify that financial holding companies, national banks, state banks, and specific credit unions can use digital assets and blockchain technology within their existing business scope (payment, lending, custody, transactions, etc.).

Article 402 Joint Portfolio Margin Rules

SEC and CFTC jointly formulated rules to allow registered dealers, futures commission merchants (FCM) or brokers to implement cross-category portfolio margin for securities, swaps, futures, and digital commodity accounts to achieve unified risk management.

Article 403 Cross-product netting capital requirements

Federal bank regulators set capital requirements to cover the risks of cross-product netting agreements between banks and bank holding companies (which allow for combined offsetting exposures in the event of counterparty defaults).

Article 404 Prohibition of interest payments on stablecoins (Core Compromise Clause)

• Prohibited: Regulated digital asset service providers and their affiliates are not allowed to pay passive interest/income on similar deposits to US users (interest-bearing stablecoins are blocked).

• Allowed: Rewards based on real trading behavior (such as trading cash rebates, member rights, market making rewards), detailed rules will be jointly formulated by SEC/CFTC/Treasury Department.

Chapter 5 Regulatory Innovation (TITLE V)

Section 501 CFTC-SEC Micro Innovation Sandbox

Establish a joint sandbox where qualified companies can test innovative financial products under the investor protection mechanism for a maximum period of 2 years (extendable).

Article 502 International Cooperation

SEC and CFTC strengthen cooperation between overseas regulatory agencies and international organizations:

• Cross-border information sharing;

• Promote technology-neutral global standards;

• Establish a digital asset cross-border regulatory sandbox.

Article 503 Research on automated compliance technology

Submit a report to Congress analyzing how blockchain and smart contracts can automate regulatory compliance.

Article 504 Annual Report on Legislative Implementation

Financial regulatory agencies submit reports to Congress (including the Senate Banking Committee) every year, explaining the implementation of this law and suggestions for legislative improvement.

Section 505 Tokenization of Securities

• Qualitative: Tokenized securities are still securities and securities laws apply.

• Research: SEC studies the regulatory framework for tokenized securities, including custody standards, cross-agency coordination, cross-border compliance, and investor protection.

• Equal treatment: In principle, tokenized securities are subject to the same regulatory rules as corresponding traditional securities (SEC retains exclusive jurisdiction).

Article 506 Voluntary adoption of post-quantum cryptography standards

Encourage the industry to voluntarily adopt the NIST post-quantum cryptography standard to improve the security resilience of digital assets.

Article 507 Cross-border anti-illegal financial coordination (led by the Ministry of Finance)

Establish an interdepartmental mechanism led by the Ministry of Finance to coordinate overseas governments and institutions to combat the illegal use of digital assets, sanctions evasion, and terrorist financing; formulate national strategies and submit progress reports to Congress every year.

Article 508 Overseas Digital Asset Transaction and Compliance Annual Report

The Treasury Department submits an annual report to Congress:

• Major overseas jurisdictions ranked by transaction volume;

• Evaluation of compliance of each jurisdiction with U.S. anti-money laundering/anti-sanctions/anti-terrorist financing standards;

• Details of diplomatic and law enforcement operations targeting high-risk jurisdictions.

Chapter 6 Software Developer Protection (TITLE VI)

Section 601 Software Developer Safe Harbor

• Exemption from securities laws: DeFi software developers and network participants who only engage in activities related to transaction packaging, distributed ledger computing power provision, and pure software development are exempt from federal/state securities laws.

• Rule formulation: The SEC formulates rules to clarify the applicable boundaries of securities laws when DeFi trading agreements involve securities activities.

Section 602 Non-Fungible Token (NFT) Safe Harbor

NFT is exempt from securities laws by default unless it involves investment contract characteristics (that is, it has security attributes).

Article 603 NFT Comprehensive Research (GAO)

GAO submitted a report to Congress to comprehensively analyze the NFT market size, uses, technical characteristics, risks and benefits.

Section 604 Blockchain Regulatory Certainty Act

• Exemption from currency transmission license: Blockchain developers and infrastructure providers are not classified as currency transmission institutions and do not need to apply for relevant licenses.

• Criminal liability retained: If you knowingly assist in the transfer of funds that are proceeds of crime or used for illegal activities, federal criminal penalties will still apply.

Section 605 Protection of Private Key Self-Escrow (“Keep Your Coin” Act)

• Core Rights: Federal agencies may not prohibit, restrict, or impair the rights of users to control digital assets using self-hosted wallets.

• Enforcement retention: The Ministry of Finance, SEC, CFTC, bank regulatory agencies, etc. retain their existing illegal finance, money laundering, terrorist financing, and sanctions enforcement powers.

Chapter 7 Customer Asset Protection (Bankruptcy Mechanism) (TITLE VII)

Article 701 Qualification of client assets in bankruptcy

Related assets and digital commodities are recognized as exclusive property of customers in Chapter 7 (Liquidation) of the Bankruptcy Law, and are subject to the same protection rules as ordinary commodities and securities (isolated from platform bankruptcy assets).

Section 702 Bankruptcy Safe Harbor

Digital commodity transactions are subject to commodity contract bankruptcy safe harbor rules: counterparties can directly close positions and dispose of collateral outside of bankruptcy proceedings (consistent with traditional derivatives and securities protection).

Chapter 8 Customer Protection (TITLE VIII)

Article 801 Investor Education Materials

The SEC and CFTC require digital asset intermediaries to provide the public with easy-to-understand educational materials, including:

• How distributed ledgers work;

• Core risks of digital assets;

• Differences from traditional markets;

• Trading/Securities Related Disclosure Rules;

• Fraud identification and reporting channels.

Article 802 Consumer Protection Reservations

Clearly: This law does not weaken the jurisdiction of the Federal Trade Commission (FTC) over unfair/deceptive practices, industry guidance, consumer education, and antitrust enforcement in the NFT and digital consumer token markets.

Article 803 Research on Digital Asset Financial Literacy

SEC and CFTC jointly study the current status of retail users’ digital asset financial literacy, evaluate the effectiveness of education, and formulate improvement strategies with quantifiable goals; submit a joint report within one year.

Article 804 Broker Bankruptcy Risk Disclosure Rules

• Rule-making time limit: The SEC issues rules within 270 days, requiring brokers to disclose in writing to investors: digital commodities, payment stablecoins, and how securities will be disposed of in the event of a broker's bankruptcy/liquidation/takeover.

• Consultation Requirements: Rulemaking must be in consultation with the CFTC and the Securities Investor Protection Corporation (SIPC).

• Disclosure timing: Brokers must disclose before receiving/purchasing/custody digital assets and keep updating.

• Disclosure: Describe the legal status and priority of repayment of relevant assets under Title II of the Dodd-Frank Act, SIPA, and the Bankruptcy Code.

Chapter 9 Other Terms (TITLE IX)

Article 901 Digital Asset Joint Advisory Committee

Establish an SEC-CFTC Joint Advisory Committee, whose members include regulatory agency representatives, industry, academic, and user representatives; it will study digital asset issues and provide non-binding suggestions to regulatory agencies; SEC and CFTC must formally review and respond to the committee's opinions.

Article 902 Memorandum of Understanding (MOU) between Regulators

SEC and CFTC signed MOU to coordinate joint supervision, enforcement actions, and information sharing; clarify:

• SEC retains jurisdiction over anti-fraud, anti-market manipulation, and insider trading;

• The CFTC retains exclusive jurisdiction over commodity market integrity.

Section 903 FinCEN Grant Authorization

In the first five years after the bill takes effect, FinCEN will be allocated $30 million per year; it authorizes FinCEN directors to provide a 20% salary premium to attract high-end talents.

Section 904 Housing Incentive Pilot (Build Now Act)

Establish housing development incentive pilots (non-core provisions) in designated Community Development Block Grant (CDBG) participating jurisdictions.

Article 905 Time limit for formulation of supporting rules

Each regulatory agency must formulate the rules necessary to implement this law through a formal announcement and consultation process within 1 year after the bill takes effect.

Article 906 Effective Date

• General provisions: The bill will be officially implemented 360 days after it takes effect.

• Provisions requiring rulemaking: Effective date is 360 days or 60 days after publication of the final rule in the Federal Register, whichever is later.