The CLARITY Act Senate Vote on May 14 Sets up a Defining Week for U.S. Crypto Regulation
The U.S. Senate Banking Committee will hold a markup vote on the Digital Asset Market CLARITY Act at 10:30 a.m.
ET on May 14. The 309-page bill proposes a framework for classifying digital assets as either commodities or securities, a distinction that would determine which federal regulator holds jurisdiction over the majority of cryptocurrency tokens in the U.S. market. Bitcoin (BTC) and Ethereum (ETH) would each receive commodity classification under the current draft. XRP (XRP) sits in a more contested position, given Ripple’s ongoing legal history with the SEC.
What the Bill Does
The CLARITY Act draws a line between digital commodities and digital securities based on the degree of decentralization of the underlying network.
Tokens issued by networks that meet a decentralization threshold would fall under the Commodity Futures Trading Commission. Tokens that fail to meet that threshold would remain under Securities and Exchange Commission oversight.
A Disruption Banking article published May 12 outlined the bill’s potential impact across the three largest non-stablecoin digital assets. Bitcoin’s decentralized proof-of-work structure makes its commodity classification the least contested element of the draft.
Ethereum’s proof-of-stake model and the role of large validators introduce more complexity.
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Background
The U.S. has operated without a comprehensive federal cryptocurrency framework since the asset class emerged. The SEC and CFTC have contested jurisdiction over digital assets for years, with courts issuing inconsistent rulings on token classification.
Congress made earlier attempts at digital asset legislation in 2022 and 2023 without passing anything into law. The CLARITY Act represents the most complete attempt yet to codify a workable framework.
Its 309 pages include definitions for digital commodities, digital securities, stablecoins, and a new category of “permitted payment stablecoin” that would require issuers to hold fully reserved dollar assets.
The bill’s progress follows a broader shift in U.S. regulatory posture through 2025 and early 2026. The SEC dropped several high-profile enforcement actions against cryptocurrency exchanges and token issuers in late 2025.
The CFTC signaled openness to expanded jurisdiction over spot digital commodity markets. That climate created a legislative window that the CLARITY Act is designed to fill.
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How Each Asset Is Affected
Bitcoin’s classification as a digital commodity under the CLARITY Act carries little controversy.
The network has no central issuer, no active development team with a meaningful token allocation, and a proof-of-work consensus mechanism that courts and regulators have consistently treated as outside securities law. Ethereum’s treatment is more debated.
The network transitioned to proof-of-stake in 2022. Staking rewards, the income validators earn by locking up ETH, resemble a return on investment in a way that some legal scholars argue triggers the Howey test used to define securities.
The bill includes a decentralization test that most legal analysts expect Ethereum to pass, but the committee markup on May 14 could produce amendments that tighten that threshold.
XRP’s situation is distinct. Ripple Labs, the company that created and distributes XRP, settled with the SEC in 2024 after years of litigation over whether XRP constituted an unregistered security sale.
The CLARITY Act’s commodity classification would retroactively resolve the jurisdictional ambiguity for XRP if the bill passes in its current form.
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Outlook
A markup vote is not a final vote. If the Senate Banking Committee advances the bill on May 14, it moves to the full Senate floor, then potentially to a conference with the House before going to the president for signature.
The timeline for a final law remains uncertain, with most observers expecting the legislative process to extend into late 2026 or early 2027. The immediate market impact of a positive markup vote could be significant for altcoins that have traded at a discount due to securities classification risk.
Tokens that receive commodity classification under the bill’s framework would face a smaller regulatory burden and could attract institutional capital that has stayed on the sidelines. The May 14 session begins at 10:30 a.m.
ET and is expected to run through the afternoon.
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