Federal Market-Structure Legislation — FIT21, CLARITY, GENIUS

Last researched: 2026-05-18

Project Crypto is interpretive guidance — it operates within existing statutes. Congress has parallel work in flight that would codify the regime. This file covers what is law, what is pending, and what they mean for builders.

Status snapshot (May 2026)

GENIUS Act — Payment stablecoin law

The Guiding and Establishing National Innovations for U.S. Stablecoins Act, signed by President Trump on July 18, 2025 ([S70], [S71], [S72]).

What it does

Creates the first federal regulatory regime for payment stablecoins in the U.S. Aligns with the SEC's "Covered Stablecoin" view (not a security under federal securities law) by giving stablecoin issuers a prudential home outside the securities regulators.

Core requirements for issuers

• 100% reserve backing in liquid assets (USD, short-duration U.S. Treasuries, etc.).
• Monthly public disclosure of reserve composition.
• Permitted Payment Stablecoin Issuer (PPSI) status — only PPSIs can issue. Non-PPSIs prohibited.
• Bank Secrecy Act applicability — AML, sanctions, CIP.
• Marketing restrictions — no claims of FDIC insurance, government backing, or legal tender status.
• Seize/freeze/burn capability — technical ability to comply with lawful orders.

Effective date

The earlier of (a) 18 months after enactment (≈ January 2027) or (b) 120 days after primary federal regulators issue implementing rules.

Builder implications

• Stablecoin issuance is no longer a free-form activity. Operating a stablecoin in the U.S. without PPSI status will be unlawful once GENIUS is effective.
• The "Covered Stablecoin" SEC staff statement ([S11]) and the GENIUS Act are complementary — SEC stays out of stablecoins; banking/prudential regulators (OCC, Fed, FDIC, state banking departments) move in.
• Foreign stablecoins offered into the U.S. likely require pathway through GENIUS as well (extraterritorial application; verify rule).
• No yield to holders. GENIUS preserves the no-yield posture that keeps stablecoins out of the securities lane.

CLARITY Act — Digital Asset Market Structure (pending)

The Digital Asset Market Clarity Act of 2025 (H.R. 3633, 119th Congress) ([S73], [S74]). Passed the House on July 17, 2025 (294–134). Cleared Senate Banking Committee on May 14, 2026 (15–9). Awaits Senate floor as of May 18, 2026.

What it does

Codifies the SEC/CFTC jurisdictional split that FIT21 (predecessor, 2024) first attempted. Creates three statutory categories:

1. Restricted digital asset — SEC jurisdiction. Default category.
2. Digital commodity — CFTC jurisdiction. Requires a "functional and decentralized" blockchain.
3. Permitted payment stablecoin — Defers to GENIUS Act / prudential regulator. SEC or CFTC may share market-conduct oversight depending on the intermediary.

Decentralization standard (carryover from FIT21)

A blockchain is "decentralized" for digital-commodity status if, among other tests:

• No person has unilateral authority to control the blockchain or its use.
• No issuer or affiliated person controls 20%+ of the digital asset's supply or voting power.

Builder implications (if enacted)

• The "graduation" path Atkins's Project Crypto previews via interpretation becomes statutory.
• A token that starts as a restricted digital asset (SEC) can transition to a digital commodity (CFTC) on satisfying the decentralization test.
• ATSs operating under SEC jurisdiction can dual-register or pass tokens to CFTC-regulated venues once the asset transitions.
• The 20% concentration test gives a hard cap on team/foundation token holdings — major design consideration for new launches.

Risks if CLARITY does not pass

The current state — Atkins's interpretation + GENIUS — is the regulatory floor. Builders can rely on interpretive guidance, but a future administration could rescind it. CLARITY would lock the SEC/CFTC division into statute, making the framework durable across administrations.

FIT21 — historical anchor

Financial Innovation and Technology for the 21st Century Act (H.R. 4763, 118th Congress) ([S75]). Passed House May 22, 2024 (279–136). Died in the Senate when the 118th Congress ended. Conceptual content carried into CLARITY.

Notable: passed over Biden administration and SEC Chair Gensler opposition. The 71 House Democrats who voted yes signaled the bipartisan baseline that CLARITY now builds on.

Other relevant bills (briefly)

• Lummis-Gillibrand "Responsible Financial Innovation Act" — Senate-side counterpart with similar SEC/CFTC division; influential on negotiation but not currently the lead vehicle.
• Blockchain Regulatory Certainty Act — clarifies that non-custodial blockchain developers and miners/validators are not money transmitters.
• Securities Clarity Act — distinguishes the "investment contract" from the "asset" subject of the contract; codifies the Ripple programmatic-vs-institutional logic.

Practical posture for builders

• Treat GENIUS as binding now. Plan stablecoin operations against the PPSI framework even before the effective date.
• Treat CLARITY as likely but not certain. Design tokens to satisfy the 20% concentration test and the "functional + decentralized" standard — useful even if CLARITY stalls, because Atkins's interpretive framework asks similar questions.
• Watch the Senate vote window. As of May 2026 the next floor action is anticipated in June.
• CFTC jurisdiction is real. Once a token is a "digital commodity," CFTC enforcement and venue registration matter as much as SEC compliance did before.

Primary sources

[S70]–[S75] — see 99-sources.md.