Momentum is building in Washington around the CLARITY Act, a sweeping piece of legislation aimed at establishing a clear regulatory framework for digital assets in the United States, though key disagreements could still slow its progress. Analysts at Citigroup said the bill remains the central force for legitimizing crypto markets, with lawmakers targeting milestones in the coming months. However, unresolved debates within the Senate Banking Committee are creating uncertainty around timing, raising the risk that final passage could slip beyond 2026. The proposed framework seeks to clarify how digital assets are classified, which regulators have oversight, and how securities and commodities laws apply. Supporters argue the bill is essential to restoring regulatory certainty and encouraging innovation at home, while critics warn that poorly defined rules could push activity offshore or constrain emerging technologies.
According to Citi’s analysis, the most difficult negotiations center on decentralized finance, particularly how DeFi protocols, developers, and software should be treated under U.S. law. Lawmakers are struggling to define when decentralized systems cross the line into regulated financial services, a question with broad implications for Web3 development, decentralized exchanges, derivatives, and stablecoin yield products. Citi warned that overly restrictive definitions could weigh on innovation, while looser standards may face resistance from regulators concerned about oversight and enforcement. By contrast, the bank sees more room for compromise on stablecoin rewards, which have become a flashpoint between traditional banks and crypto firms. Possible middle-ground solutions include time-limited rewards or alternative incentive structures that address concerns about regulatory arbitrage without undermining adoption.
The report also highlighted tokenized equities as another area of debate, noting resistance from market participants worried about bypassing existing financial infrastructure. Citi suggested potential paths forward such as clearly labeling tokenized shares as securities, limiting distribution to current market rails, adopting hybrid settlement models, or launching regulatory pilots. These approaches could allow experimentation without disrupting the traditional securities value chain. While opposition from some crypto firms has added noise to the process, analysts say it is unlikely to derail the legislation entirely. As negotiations continue, the outcome of the CLARITY Act is expected to play a defining role in shaping how stablecoins, DeFi, and tokenized assets evolve within the U.S. regulatory landscape.
