Senate Banking Panel Releases CLARITY Act Draft Ahead of Thursday Markup

Constraints ahead

A key provision in the draft bill contains language that would bar the U.S. Securities and Exchange Commission from classifying any token that served as the principal asset of a U.S.-listed spot exchange-traded product as of January 1, 2026 as a security. Notably, Bitcoin and Ethereum had spot ETFs trading on U.S. exchanges by that date. Section 105 of the draft also bars the SEC from classifying a digital asset as a security if a U.S. court issued a non-appealable judgment before enactment finding it was not. Both provisions together mean the agency could not revisit the legal status of Bitcoin or Ethereum regardless of future enforcement priorities. Meanwhile, Section 102 of the draft bill also creates a certification process under which a token issuer can submit evidence to the SEC that their token is not a security. The filing then becomes legally effective if the agency does not object within 60 days. Combined with the Sec. 105 ETF cutoff, the two provisions together significantly constrain how and when the SEC can assert jurisdiction over digital assets. The latter provision “creates a silence equals safe harbor regime” where SEC non-response “effectively grants regulatory legitimacy without full substantive review,” Dominic John, analyst at Zeus Research, told *Decrypt*. This risks a scenario where “speed supersedes scrutiny,” and shifts the burden “from issuer accountability to weak long-term enforcement and investor protection safeguards,” John added. Anchoring non-security status to a fixed date "prioritizes market maturity over reality," John said, warning that date-driven designation could grant permanent exemption from investor protection standards "regardless of how the asset evolves." The yield compromise resolves "one of the remaining open questions that was giving institutional participants reason to wait," Louis Bellet, co-founder of decentralized clearing infrastructure firm Yellow Network, told *Decrypt*. Market makers and institutional flow desks "have been operating in a holding pattern on their on-chain strategies precisely because the regulatory perimeter has been undefined," Bellet added. Bellet warned the 60-day window is "only as strong as the Commission's capacity to deploy it," with borderline cases at risk of slipping through. The ETF cutoff, he added, "conflates market acceptance with legal status," creating a two-tier system tied to "which assets happened to have ETFs approved before a specific date."