Digital Asset Bill Bans Fed’s Digital Dollar, Sets $50M Cap for Crypto Startups

The Digital Asset Market Clarity Act of 2025 (or the CLARITY Act) is the biggest attempt yet to sort out the Wild West of digital assets, and it’s a massive undertaking. This bill attempts to draw clear lines in the sand, determining when a crypto asset is regulated by the Securities and Exchange Commission (SEC) and when it falls under the Commodity Futures Trading Commission (CFTC). More importantly for everyday people, it tries to create a fast lane for crypto startups to raise capital and, in a dramatic twist, puts a hard stop on the Federal Reserve issuing a digital dollar.

Who’s the Boss? SEC vs. CFTC

For years, regulators have been fighting over whether digital assets are securities (like stocks) or commodities (like gold or oil). This bill tries to end that debate by creating new definitions under both the Securities Act of 1933 and the Commodity Exchange Act (CEA). Essentially, it grants the CFTC exclusive jurisdiction over the spot (cash) market for “digital commodities” traded on registered exchanges. This is a huge win for the CFTC, moving assets like Bitcoin and many others firmly into the commodity camp. The SEC retains its authority over assets that are clearly securities, but the bill explicitly carves out digital commodities and permitted payment stablecoins from being defined as securities, simplifying things for the vast majority of crypto trading.

The Startup Fast Lane: $50 Million and the Maturity Clock

One of the biggest headaches for crypto projects is raising money without running afoul of securities laws. This bill introduces a new exemption (Section 202) that lets issuers sell investment contracts tied to a digital commodity without full SEC registration, provided they meet strict criteria. The key is a $50 million cap on funds raised over 12 months, and the issuer must commit to achieving a “mature blockchain system” within four years. This maturity means the system is decentralized, with no single person or group in control. If you’re a startup, this is a clear path to market: raise up to $50 million, build a decentralized system, and transition your asset from a regulated investment contract to a commodity once it’s mature.

The Insider Trading Trap

While the bill helps startups, it clamps down hard on the founders and early investors—the “digital commodity affiliated persons.” To stop them from dumping their tokens on the market before the project is fully decentralized, the bill imposes severe trading restrictions (Section 204). Before the blockchain is certified as mature, these insiders face a 12-month minimum holding period and are capped on how much they can sell in a year (between 5% and 20% of their holdings). If you’re a developer or founder, this means your personal liquidity is severely restricted until the system is truly decentralized, ensuring your financial incentive is aligned with the long-term success and decentralization of the project, not just a quick payday.

The CBDC Ban: Protecting Cash Privacy

Perhaps the most impactful section for the average person is Title VI, dubbed the “Anti-CBDC Surveillance State Act.” This title places an absolute prohibition on the Federal Reserve developing, testing, or issuing a Central Bank Digital Currency (CBDC) to individuals (Sections 602, 604). A CBDC would be a digital dollar issued directly by the Fed, potentially allowing the government to track every transaction and even impose controls, such as expiration dates, on money. By banning it, this bill aims to protect the financial privacy currently afforded by physical cash, ensuring the government cannot create a digital currency that is inherently traceable or programmable. This is a massive win for privacy advocates and commercial banks, who view a Fed-issued CBDC as a competitor.

The Regulatory Net Expands

For businesses, the bill throws a wide net over digital commodity brokers, dealers, and exchanges, requiring them to register with the CFTC (Title IV). This brings them under the same strict rules as traditional financial institutions, including mandatory Anti-Money Laundering (AML) programs, customer identification requirements, and strong capital and recordkeeping standards. If you trade crypto on a platform, these new rules mean your assets and funds should be much safer because the platforms must follow strict segregation rules and use “qualified digital asset custodians.” This is a necessary step for market stability but means higher compliance costs for the platforms, which may eventually trickle down to customers.

DeFi Gets a Pass (Mostly)

The bill recognizes that decentralized finance (DeFi) protocols—where transactions happen automatically via code—are fundamentally different from traditional exchanges. It grants broad exemptions (Sections 309, 409) to non-controlling blockchain developers and DeFi protocols from many securities and commodity registration requirements. If you’re just running a node, developing software, or providing liquidity to a decentralized pool for spot trading, you won’t be treated as a broker or dealer. However, the bill is clear: this exemption is not a license to commit fraud. The SEC and CFTC explicitly retain their authority to go after bad actors who misuse these systems for manipulation or fraud. The software is exempt, but the scammer isn't.