Why CLARITY can’t wait: A Q&A on the market structure bill with Marc Andreessen and Chris Dixon

Crypto is no longer a niche market. Stablecoins move trillions of dollars, and major banks and payment companies are building onchain, but the federal rules governing much of that activity remain incomplete.

That is the problem the “CLARITY Act” (HR 3633) is meant to solve. The bill would establish federal oversight for crypto markets, define the respective roles of the SEC and CFTC, impose disclosures and restrictions on insiders, and bring exchanges and other intermediaries under rules familiar from traditional finance. If passed, this bill will establish clear rules of the road for blockchain systems — ending the years of uncertainty that have stifled innovation and exposed consumers to harm.

This post — based on a recent conversation with a16z Cofounder and General Partner Marc Andreessen and a16z crypto Founder and Managing Partner Chris Dixon — covers why crypto needs clear, lasting rules now; how CLARITY would protect consumers; why regulatory ambiguity rewards bad actors; and how the bill addresses illicit finance, privacy, and government ethics. It also explains what happens if the bill fails; why American technological leadership is at stake; and why the biggest risk is the status quo.

For more, watch the full conversation:

Why does crypto need rules now?

Crypto has come a long way since the Bitcoin whitepaper. What started as a technology used largely by hobbyists and enthusiasts is now an industry with mature infrastructure and growing institutional adoption.

A technology has become an industry: stablecoins now rival the size of the Visa network, with trillions of dollars transacted. Major financial institutions, including banks, asset managers, card networks, and fintech companies, are building products with stablecoins, tokenized stocks, tokenized deposits, and other digital assets. The underlying networks have also become faster and cheaper. Transactions that once cost several dollars can now settle in under a second for less than a penny on widely used blockchains.

For a variety of reasons, the regulation around crypto was broken into two components — stablecoins and the rest of the market. The GENIUS Act, which became law in July 2025, created a federal framework for stablecoins, but stablecoins depend on blockchain networks and markets that still lack a comprehensive federal structure. It is the equivalent of regulating cell phones while leaving the cell towers in legal limbo.

Agency guidance can fill some gaps, but it is not a substitute for legislation. Guidance can change with agency leadership or a new administration. Companies deciding whether to make investments that may take five or ten years need to know what the rules are, which regulator has authority, and whether the product they build today will remain lawful tomorrow.

CLARITY would provide a permanent framework for doing business responsibly.

How would CLARITY protect consumers?

The most basic consumer-protection problem in crypto is that exchanges do not operate under the same comprehensive federal framework that governs major securities and commodities exchanges.

The New York Stock Exchange and Nasdaq have federal regulators. Crypto exchanges do not have an equivalent market-wide system of registration, supervision, audits, disclosures, surveillance, and customer-asset protections. The CLARITY Act would provide a clear pathway for digital assets to transition from the Securities and Exchange Commission (SEC) to oversight by the Commodity Futures Trading Commission (CFTC).

A federally registered crypto exchange would be subject to audits and financial controls. It would have to safeguard customer assets, comply with anti-fraud and insider-trading rules, and provide regulators with information about its operations. A company that refused to meet those standards could not legally operate in the United States.

Those requirements help prevent the conditions that allowed FTX to collapse. FTX allegedly moved money among related entities, lacked adequate controls, and did not hold the customer assets it claimed to hold. Federal oversight cannot guarantee that fraud will never happen. It can make it much harder to hide, and it can give regulators the authority to intervene before a failure becomes a catastrophe.

The same principle applies to products marketed as stablecoins. Terra-Luna was presented as stable even though it was not backed by dollars or another stable reserve asset. Under the stablecoin framework, a compliant dollar-denominated stablecoin must be backed by corresponding reserves and subject to audit. CLARITY would bring comparable discipline to the rest of the market.

How would CLARITY stop ambiguity from rewarding bad actors?

Regulatory ambiguity creates a race to the bottom.

A U.S.-based company that takes compliance seriously may spend heavily on lawyers, controls, audits, sanctions screening, and customer protections. Those obligations cost money and can slow product development. An offshore competitor can avoid those expenses, copy the product, charge lower fees, and move faster precisely because it is not doing the compliance work.

The result is that uncertainty can punish the responsible company and reward its offshore counterpart. A noncompliant offshore exchange shouldn’t be able to serve Americans while a compliant U.S. exchange bears the full cost of following the law.

CLARITY would define the regulatory perimeter: which businesses are intermediaries, which rules apply to them, which agency supervises them, and what happens if they refuse to comply. A company that holds customer funds or facilitates financial transactions would be subject to the same kinds of anti-money-laundering, sanctions, and Treasury requirements that apply to comparable financial businesses such as payment providers and fintech companies.

Clear rules favor companies willing to meet a standard. Gray areas favor companies willing to exploit them.

How would CLARITY strengthen sanctions enforcement?

Privacy isn’t the same as secrecy. Public blockchains are often described as anonymous. In practice, many are highly transparent.

Transactions are recorded permanently on a public ledger. A wallet address may not immediately display a legal name, but investigators can follow the movement of funds and connect that activity to exchanges, accounts, devices, or other identifying information. The records remain available even years later, which can give law enforcement evidence that did not exist at the time of the transaction.

Unlike payment methods that may leave no public trace, blockchains produce trails. That is why some national security officials have described crypto activity as creating “prosecution futures”: transactions recorded now can help investigators identify and prosecute criminals later.

But traceability and privacy are separate issues. A person should not have to publish every medical payment or transfer to the entire world in order to use a blockchain. The financial system already recognizes that ordinary people need privacy even though regulated institutions remain subject to sanctions and anti-money-laundering obligations.

The early debate over internet encryption offers a useful comparison. Strong encryption was once treated as a threat because criminals could use it. It was even classified under export rules alongside military technology. But encryption also made secure banking, ecommerce, and confidential communication possible.

Blockchain privacy raises the same distinction. Privacy protects legitimate activity. Secrecy designed to evade the law is still subject to enforcement.

How does CLARITY resolve the stablecoin rewards debate while allowing banks to keep building onchain?

Banks have argued that stablecoin issuers and wallet providers should not be allowed to pay interest on balances in a way that recreates a bank account outside the banking system. Their concern is that consumers could move deposits out of banks and into stablecoin products, reducing the funding banks use to make loans.

CLARITY addresses that concern by barring interest on stablecoin balances and products that are functionally or economically equivalent to an interest-bearing account.

The bill still leaves room for transaction-based rewards. A wallet provider or retailer could reward a customer for using a stablecoin to make purchases, much as a credit card offers points or a retailer operates a loyalty program. The distinction is between earning a benefit for activity and earning interest simply for holding a balance.

That compromise gives banks much of what they asked for without going so far that it would prohibit ordinary rewards programs, including programs resembling those already offered by card networks, payment apps, and retailers.

The debate is notable because banks are already adopting blockchain technology. Other banks, asset managers, and payment companies have their own initiatives. Goldman Sachs, Fidelity, BlackRock, Stripe, Wells Fargo, JPMorgan, and other large financial institutions have built or backed blockchain products.

Banks see the same opportunity the crypto industry sees: financial infrastructure is fragmented and difficult to modernize. Blockchains give those institutions a shared framework, allowing them to reduce layers of mediation, settle assets on common infrastructure, and modernize together rather than requiring every bank to rebuild an interconnected system on its own.

When are software developers liable under CLARITY?

CLARITY distinguishes between knowingly helping someone commit a crime and publishing general-purpose software. Developers who build tools for criminal use, market them to criminals, or directly assist illegal activity can still be held accountable.

What the bill rejects is unlimited liability for every downstream use a developer cannot foresee or control. Open source code can be copied, modified, and deployed by people the original developer has never met and for use cases they never anticipated. Making developers responsible for all of those uses would make open source nearly impossible to build or fund.

The consequences would reach far beyond crypto. Academic research, startups, venture investment, and open AI models all depend on open source software. The workable line is intent and participation: hold people liable when they knowingly facilitate crimes, not when someone later misuses a neutral tool.

What does CLARITY actually do to securities law?

CLARITY does not turn securities into non-securities simply because they are on a blockchain. A tokenized stock is still a stock. It is still a security and remains under SEC oversight. A company cannot avoid disclosure, registration, or investor-protection requirements by putting an asset onchain or calling it a token.

The bill addresses a different problem: how to regulate digital assets associated with blockchain networks that change over time.

A quick summary of CLARITY’s risk-based framework: A new blockchain generally begins with a central actor. A founder, company, or small group may control the network, possess information unavailable to the public, and make decisions that affect the token’s value. During that stage, the asset would be subject to SEC oversight and securities-style requirements. Those requirements include disclosures, restrictions on insiders, and lockup periods for founders and early investors.

As the network develops, control can become distributed. If it meets defined thresholds of decentralization, the asset may begin to resemble a commodity more than a corporate security. At that point, the CFTC would oversee it.

That does not mean the asset becomes unregulated. Commodity regulation addresses fraud, manipulation, market cornering, and other abusive conduct. The regulator changes because the nature of the asset has changed.

The bill would also impose restrictions that do not exist clearly today. Founders, venture investors, and other insiders more broadly could face longer lockups and stronger disclosure obligations while a network remains centrally controlled. Those restrictions are meant to prevent insiders from selling into the market before ordinary participants have comparable information or before the product has developed into a sufficiently decentralized network.

What happens if CLARITY doesn’t pass?

Crypto regulation would not disappear. The SEC, CFTC, Treasury, and other agencies have been and would likely continue issuing guidance and using the authority they already have to provide rules within their jurisdiction.

The problem is that these agency interpretations can change between administrations. A company can spend years building under one set of assumptions only to face a different interpretation after an election or a change in agency leadership.

The uncertainty affects consumer protection as much as investment. A lasting framework gives regulators clear authority and gives companies an obligation to register, disclose information, protect customer assets, and follow market rules. Without legislation, those responsibilities remain fragmented and contestable.

The industry has survived years of aggressive enforcement and political hostility. The more likely result is that companies continue building elsewhere. That would leave the United States with less oversight. Offshore companies are harder for American regulators to supervise, harder for law enforcement to reach, and less likely to build around U.S. standards.

Why is CLARITY part of the long tradition of American technological leadership?

Once a technology has been invented, it’s unlikely to be uninvented. The question is where it will be developed, which companies will lead it, and whose rules will shape it.

The United States has benefited for more than a century from being the country where major technologies are built. That leadership produces companies, jobs, tax revenue, technical expertise, and the economic capacity to fund national priorities. It also creates security advantages.

The history of encryption shows what is at stake. When the United States restricted strong encryption exports, foreign competitors did not stop building encryption. They built products outside the United States, and customers used those products instead. Once the restrictions changed, American companies helped build a secure internet economy.

Blockchain technologies present the same question. The financial systems, technical standards, and companies will develop somewhere. If they develop primarily offshore, the United States loses economic opportunity and regulatory power at the same time.

CLARITY would give responsible companies a reason to build under American law. That would support consumers, law enforcement, national security, and the country’s ability to set standards for the next generation of financial infrastructure.

Who else supports CLARITY?

CLARITY has drawn support from a mix of lawmakers, law enforcement organizations, financial institutions, and technology companies.

The legislation has been a bipartisan effort in Congress, with lawmakers from both parties working for years to establish a federal framework for digital asset markets. The Fraternal Order of Police, the country’s largest law enforcement organization, has also endorsed the bill, pushing back on claims that it would weaken sanctions or anti-money-laundering enforcement.

Support extends across the financial sector. Goldman Sachs CEO David Solomon has endorsed CLARITY, while firms and fintechs are already building blockchain products. Far-reaching support reflects growing agreement on the underlying need: the United States should have clear, enforceable rules for digital asset markets.

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When the rules for markets are uncertain, consumers can’t know which protections apply, while responsible companies spend heavily on compliance and offshore competitors avoid it. CLARITY would replace that uncertainty with a defined system.

The relevant comparison is not between CLARITY and another law, but between CLARITY and the status quo. By giving responsible companies a clear path to build, CLARITY would strengthen consumer protections, support law enforcement, and help ensure the next generation of financial technology is developed in the U.S.