The Digital Asset Market CLARITY Act (H.R. 3633) is the most advanced crypto market-structure legislation in U.S. history, but as of June 2026, it is not law. This post outlines what the bill would require of U.S. depository institutions if enacted in close to its current form, what remains under negotiation, and what banks should do during the period of legislative uncertainty.
Where the bill stands
The House passed H.R. 3633 on July 17, 2025 by a vote of 294-134 (House Roll Call No. 199). The Senate Banking Committee marked up its substitute on May 14, 2026, advancing it 15-9 with Senators Ruben Gallego (D-AZ) and Angela Alsobrooks (D-MD) joining the Republican majority (Senate Banking Committee Business Meeting, May 14, 2026). H.R. 3633 was dual-referred to the Senate Banking and Senate Agriculture Committees; the Banking substitute handled the CFTC and commodities provisions under a referral arrangement, and the Agriculture Committee has not yet marked up. Treasury Secretary Scott Bessent has publicly called for a Senate floor vote before the August 2026 recess.
Three steps remain before CLARITY can bind any institution:
The Senate calendar has roughly eight weeks before the August recess. Unresolved provisions on illicit finance, conflict of interest, and the separation of trading and custody functions remain under negotiation.
CLARITY Act and GENIUS Act: how the two statutes interact
The two statutes are complementary. GENIUS is the issuer-side stablecoin law. CLARITY is the market-structure framework for the broader digital-asset ecosystem.
What CLARITY would permit U.S. depository institutions to do
The Senate Banking substitute would expressly permit banks and credit unions to engage in custody, trading, lending, payment processing, brokerage, derivatives, and node operation involving digital assets and distributed ledger systems, provided the underlying activity is one the institution is chartered to perform. Tokenized securities would receive the same regulatory treatment as the underlying instrument. No additional CFTC registration as a digital commodity custodian would be required for a bank providing custody services under existing charter authority.
If enacted as drafted, this would be the most consequential provision for U.S. depository institutions because it would replace the interpretive-letter framework established by OCC Interpretive Letter 1170 (July 2020) and IL 1172 (September 2020), as revised by IL 1179 (November 2021) and IL 1183 (March 2025), with explicit statutory authority. IL 1183 rescinded the supervisory non-objection requirement IL 1179 had introduced, so the current supervisory baseline is IL 1183. Institutions operating under that baseline would not lose existing permissions, but the basis for those permissions would shift from interpretive guidance to statute.
What CLARITY would require of banks
The bill would designate digital commodity brokers, dealers, and exchanges as financial institutions under the Bank Secrecy Act. All obligations described in this section are conditional on enactment in close to the current Senate Banking text; the present-tense framing below describes the operational state CLARITY would create, not current law.
Counterparty due diligence. Banks must look beyond confirming CFTC registration of a digital commodity counterparty and assess that counterparty's own BSA program, sanctions controls, and supervisory history. Existing CDD obligations under 31 CFR 1020.210 (AML program for banks) and 31 CFR 1010.230 (beneficial ownership for legal entity customers) apply, but the universe of in-scope counterparties expands.
BSA/AML compliance program. Banks apply 31 CFR Chapter X requirements to a wider set of digital-asset activities, including the recordkeeping and Travel Rule for banks (31 CFR 1020.410(b)), Customer Identification Program (31 CFR 1020.220), and SAR filing (31 CFR 1020.320).
Travel Rule. Under the Senate Banking substitute, the Travel Rule applies to digital asset transfers above $3,000, with originator and beneficiary information transmitted with each transfer. This is consistent with the existing $3,000 fiat threshold under 31 CFR 1020.410(b) and with FinCEN's December 2020 proposal on virtual asset transfers, though final mechanics would be subject to FinCEN rulemaking.
Transaction monitoring. Existing rule sets tuned for fiat banking hours and settlement windows must be recalibrated for 24/7 markets, high-velocity cross-border flows, and pseudonymous counterparties. Transaction monitoring obligations flow from the AML program rule (31 CFR 1020.210), not from the SAR filing rule. Banks should expect examiners to test rule effectiveness against on-chain typologies.
Customer Identification Program. CIPs under 31 CFR 1020.220 need a digital-asset-specific track that addresses self-hosted wallet attribution, multi-hop transaction tracing, and non-custodial counterparty identification. CIP under existing rules contemplates identifying a natural or legal person; on-chain identification often starts with an address, and the attribution path back to a verified identity must be documented.
SAR narratives. SAR filings under 31 CFR 1020.320 covering digital-asset activity must include address attribution, transaction graphs, and confidence levels in addition to the standard fiat narrative format. FinCEN's 2019 guidance on convertible virtual currency (FIN-2019-G001) and its 2022 and 2023 advisories on digital asset typologies establish the evidentiary expectations.
Sanctions screening. OFAC obligations extend to wallet addresses on the SDN List and to U.S.-operated "distributed ledger messaging systems," which the bill defines to capture DeFi front ends owned or operated by U.S. persons.
Stablecoin yield: the bank-deposit boundary
The Senate Banking substitute permits activity-based and transaction-based rewards on payment stablecoin balances but blocks anything "economically or functionally equivalent to interest on a bank deposit." The SEC, CFTC, and Treasury would be required to jointly issue clarifying rules within one year of enactment.
The American Bankers Association (ABA), the Independent Community Bankers of America (ICBA), the Bank Policy Institute (BPI), the Consumer Bankers Association, the Financial Services Forum, and the National Bankers Association co-signed a joint trade-association letter seeking tighter language before a floor vote. ICBA has separately published a quantitative analysis projecting that interest-equivalent stablecoin yield could reduce community bank lending capacity by roughly $850 billion. The drafting risk for issuers and partner banks is that the post-enactment joint rulemaking could draw the deposit-equivalence line in ways that disrupt existing partnership economics.
State regulators and dual banking
CLARITY would not preempt state trust-company or banking charters. State-chartered crypto trust companies operating under existing state law (for example, Wyoming Special Purpose Depository Institutions chartered under Wyo. Stat. Ann. § 13-12-101 et seq., or New York limited-purpose trust companies chartered under N.Y. Banking Law §§ 100, 102-a) would retain their existing authority. Federally chartered institutions and state-chartered banks supervised under the dual banking system would each operate under their respective primary regulators, with CLARITY adding a federal floor without displacing state law.
Conflict-of-interest and separation provisions remain unresolved
The Senate Banking text leaves open whether registered digital commodity exchanges must separate trading, custody, and clearing functions, and whether bank holding companies that engage in digital-asset activities face additional firewalls. Minority staff on the Senate Banking Committee released an advisory contending the bill "fails to address key vulnerabilities" related to mixers, DeFi conduits, and sanctions evasion. Floor amendments addressing one or more of these issues are likely.
Enforcement and penalty exposure
The Senate Banking substitute does not appear to amend 12 U.S.C. § 1818 (federal banking enforcement authority for OCC, Federal Reserve, and FDIC supervised institutions) or 12 U.S.C. § 1786 (NCUA enforcement for federally insured credit unions) directly. Enforcement against a federally insured bank for digital-asset compliance failures would proceed under existing supervisory enforcement authority and existing BSA civil money penalty structures (31 U.S.C. § 5321). Banks should treat any CLARITY-driven program gap as carrying the same CMP exposure as existing BSA program deficiencies, scaled by the volume of in-scope activity. CCOs should expect that post-enactment supervisory cycles will incorporate CLARITY-related findings into existing MRA and MRIA processes.
What examiners are already asking
OCC and Federal Reserve examiners assess wallet attribution methodology, transaction monitoring tuned for crypto-native patterns, sanctioned-address procedures, and investigation package completion timelines as part of existing supervisory programs. The CLARITY Act would not invent these expectations; it would codify them and extend them to a wider set of bank activities. Banks that procure wallet attribution and on-chain monitoring tooling are also expected to meet Federal Reserve SR Letter 11-7 (April 4, 2011) and the parallel OCC Bulletin 2011-12 model risk management standards, with documented validation, performance monitoring, and challenge processes.
What to do now
Three steps are defensible regardless of whether CLARITY is signed in July 2026, December 2026, or 2027.
How CipherOwl maps to these requirements
CipherOwl is the infrastructure layer banks use to apply institutional compliance standards to digital asset transactions. Three obligations the bill describes are directly addressable with on-chain tooling that meets the model risk and evidentiary expectations banks already operate under.
Wallet attribution under SR 11-7 and OCC Bulletin 2011-12. Blockchain attribution is a model under both standards. CipherOwl provides versioned attribution methodology, source data and external validator references for each label, confidence scoring per attribution, and the full reasoning trail required for independent validation. Banks deploy CipherOwl on-prem inside their perimeter, which addresses the data sovereignty constraints that block multi-tenant SaaS at Tier 1 and Tier 2 institutions and gives the MRM team the artifacts SR 11-7 requires for inventory, validation, and ongoing performance monitoring.
Counterparty due diligence on digital commodity brokers, dealers, and exchanges. Confirming CFTC registration is the floor, not the program. CipherOwl's entity intelligence assesses a counterparty's on-chain behavior, attribution history, sanctions exposure, and connected counterparties, producing a documented assessment that goes into the bank's CDD file alongside traditional KYC and 31 CFR 1010.230 beneficial ownership records.
SAR narratives with address attribution and transaction graphs. SAR filings under 31 CFR 1020.320 covering digital asset activity must explain how addresses were attributed and how funds moved across hops, bridges, and chains. Strix, the CipherOwl AI agent, generates investigation graphs automatically, produces plain-language narratives with the underlying chain of evidence, and outputs SAR-ready packages in formats compliance and legal teams can use without rework. Examiners walking the file see the source data, entity relationships, confidence scores, and external validator references behind every conclusion.
The post is not a substitute for legal advice. Banks evaluating CLARITY-related program changes should consult counsel. CipherOwl works with bank compliance, MRM, and audit teams on the operational layer the legal analysis ultimately maps to.
Frequently asked questions
What does the CLARITY Act require banks to do? The bill is not yet law. If enacted as drafted, it would require banks transacting with digital commodity brokers, dealers, and exchanges to apply BSA program requirements (CDD, CIP, SAR filing, Travel Rule) to those counterparties, recalibrate transaction monitoring for on-chain typologies, and extend sanctions screening to wallet addresses and certain U.S.-operated DeFi front ends.
When will the CLARITY Act become law? There is no certain date. The bill has passed the House (July 2025) and cleared the Senate Banking Committee (May 14, 2026). It still requires Senate Agriculture markup or referral resolution, a Senate floor vote (60 votes for cloture), a conference reconciliation with the House version, and presidential signature. Treasury has called for a Senate floor vote before the August 2026 recess. The 2026 calendar is plausible but not assured.
How does the CLARITY Act differ from the GENIUS Act? The GENIUS Act (signed July 18, 2025) governs permitted payment stablecoin issuers (PPSIs) and is the issuer-side stablecoin statute. CLARITY would govern the broader market structure for digital assets, including custody by banks, BSA designation of digital commodity intermediaries, and the SEC/CFTC jurisdictional boundary. The two statutes overlap only on stablecoin yield, which CLARITY would address through joint SEC/CFTC/Treasury rulemaking.
Does the CLARITY Act apply to stablecoins? CLARITY does not regulate stablecoin issuance, which is GENIUS Act territory. CLARITY does address stablecoin rewards and yield, permitting activity-based and transaction-based rewards but blocking anything functionally equivalent to bank-deposit interest.
Does the CLARITY Act replace existing BSA requirements for banks? No. CLARITY is additive. Existing BSA requirements under 31 CFR Chapter X (AML program, CIP, SAR filing, Travel Rule, beneficial ownership) continue to apply. CLARITY would extend BSA designation to a wider set of digital-asset intermediaries and add specific requirements (counterparty due diligence on digital commodity firms, sanctions screening of wallet addresses) on top of that existing framework.
What is the Travel Rule threshold under CLARITY? The Senate Banking substitute applies the Travel Rule to digital asset transfers above $3,000 with originator and beneficiary information transmitted with each transfer, consistent with the existing $3,000 threshold under 31 CFR 1020.410(b). Final implementing rules would be issued by FinCEN.
Do banks need a CFTC license or registration under the CLARITY Act? No additional CFTC registration as a digital commodity custodian would be required for a bank providing custody services under existing charter authority. Banks engaging in activities beyond custody, including trading on registered digital commodity exchanges, would be subject to the SEC/CFTC jurisdictional regime CLARITY establishes for those activities.
What should compliance officers do now? Inventory counterparty exposures to digital commodity intermediaries and stablecoin issuers, document the gap against existing 31 CFR Chapter X requirements, treat transaction monitoring recalibration for 24/7 markets as a discrete program, and meet SR 11-7 model risk standards for wallet attribution and on-chain monitoring tools.
References
Primary sources
Secondary analysis
Bank compliance and MRM teams scoping CLARITY readiness work can see how CipherOwl's attribution methodology, counterparty intelligence, and SAR-ready evidence packages map to their existing program: see /platform or talk to our team.