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The CLARITY Act passed the Senate Banking Committee. That’s a big deal — but it’s not the finish line, and it’s not even close to catching up with what the EU or Singapore already have running.
For exchanges like Coinbase and Kraken, the bill offers something they’ve wanted for years: a federal framework that actually separates crypto spot markets from securities law ambiguity. Institutional firms would finally get written rules distinguishing digital commodities from securities tokens. Under the proposed structure, crypto firms would register with the CFTC under categories like exchange, broker, or dealer, while the SEC would keep oversight over token offerings that qualify as securities. But none of that kicks in automatically. The bill still needs Senate approval, and after that comes joint SEC-CFTC rulemaking — which could drag on for months, maybe longer. Unclear how fast that process actually moves.
Not exactly a sprint.
Where the US Falls Short on Custody Rules
The CLARITY Act does get one thing right: it bans co-mingling of client and firm assets, and it requires client funds to sit with a qualified custodian. After the FTX collapse, that’s basically table stakes. But here’s the problem — the standards for what counts as a “qualified custodian” aren’t written yet. Pending. No details on timeline.
Compare that to Hong Kong, where rules already require 98% of client assets to stay in cold storage. The UAE goes further, mandating separate wallets for each individual client’s assets, layered with cybersecurity compliance requirements. Singapore’s MAS runs monthly checks and annual audits of custody arrangements. The US, right now, doesn’t have any of that pinned down. The CLARITY Act points in the right direction, but the specifics — the stuff that actually protects retail investors — still need to be filled in.
Capital requirements are in the same boat. The EU and Singapore both use tiered capital thresholds based on what services a firm offers. The US hasn’t published specific figures. That gap matters because firms planning compliance programs need hard numbers, not a promise that numbers are coming.
Stablecoin Rules and the Banking Industry’s Fears
On stablecoins, the CLARITY Act is actually pretty concrete. Issuers would need to maintain 1:1 reserves backed by cash or US Treasuries, publish monthly public disclosures, and algorithmic stablecoins are flat-out prohibited. That last part aligns with how the EU and Singapore already handle it. MiCA bans algorithmic stablecoins too. Singapore’s framework under the MAS carries similar restrictions.
But US banking groups aren’t thrilled. Their concern is pretty straightforward: stablecoin offerings backed by Treasuries start to look a lot like deposit products, and that could pull money away from traditional bank deposits. Less deposits means less local lending capacity. It’s probably a legitimate concern, even if it’s also partly self-interested lobbying. The Act doesn’t resolve that tension yet.
The UAE adds another wrinkle worth watching. Foreign stablecoins — think USDC — are restricted to licensed platforms there and banned entirely from retail settings. The US framework doesn’t go that far, but the contrast shows how differently regulators are thinking about stablecoin risk across jurisdictions.
Stablecoin adoption across Asia has grown sharply in recent years, which is part of why regulators in Singapore and Hong Kong moved early. The US is playing catch-up on enforcement, even if the legislative intent is now clearly there.
The Gap Between Intent and Implementation
The EU’s MiCA is probably the clearest benchmark here. Licenses are passported across member states, meaning a firm approved in one EU country can operate across the bloc. Asset segregation rules are operational, not theoretical. Operational security standards are written down. Singapore’s MAS enforces strict AML supervision under the Payment Services Act, with licensing already running.
The CLARITY Act, if it clears the Senate, would move the US meaningfully closer to that level of structure. But it’s worth being honest about the gap. Other jurisdictions didn’t just pass legislation — they built out the rulemaking, the enforcement mechanisms, and the supervisory infrastructure. The US is still at step one of a multi-step process.
And the stablecoin question, the custody standards, the capital thresholds — those aren’t small details. They’re the actual substance of what makes a regulatory framework work in practice rather than just on paper.
The next formal step is Senate approval, followed by joint SEC-CFTC rulemaking.
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Frequently Asked Questions
What does the CLARITY Act require for stablecoin issuers?
The CLARITY Act requires stablecoin issuers to maintain 1:1 reserves backed by cash or US Treasuries, make monthly public disclosures, and prohibits algorithmic stablecoins entirely.
How do US crypto custody rules compare to Hong Kong and the UAE?
The CLARITY Act bans co-mingling of client and firm assets and requires a qualified custodian, but custodian standards aren’t finalized yet. Hong Kong already mandates 98% of client assets in cold storage, and the UAE requires separate wallets per client with cybersecurity compliance.
