Crypto guidance is a step forward, but only Congress can finish the job

• Key insight: Interpretive guidance from regulators does not deliver the kind of certainty that companies want as they consider expanding into the world of digital assets.
• What's at stake: Without durable law, the U.S. could lag behind jurisdictions that have already implemented comprehensive frameworks, such as the European Union's Markets in Crypto-Assets Regulation.
• Forward look:  Passing the CLARITY Act would provide the durable legal framework that market participants, investors and builders need to commit capital and build for the long term in the United States.

The Securities and Exchange Commission and Commodity Futures Trading Commission's joint interpretive guidance on digital assets issued in mid-March is a long-overdue step toward clarity. After years of regulation by enforcement, highlighted by the SEC's high-profile actions against exchanges like Coinbase, regulators have finally aligned on a more coherent approach to interpreting existing law. This is meaningful progress; however, it is not enough to support American digital asset innovation because the guidance offers direction, not certainty, and markets do not run on direction alone.

Without durable law, the U.S. could lag behind jurisdictions that have already implemented comprehensive frameworks, such as the European Union's Markets in Crypto-Assets Regulation. What the guidance provides is a taxonomy of digital assets (including categories such as digital commodities, collectibles and tools) that offers a more structured lens through which market participants can analyze their activities; it confirms the SEC and CFTC's current view that a digital asset is separate from the "investment contract" used to sell it, a critical distinction that enables digital assets to function independently in secondary markets under certain circumstances; and, finally, it narrows previously ambiguous areas that had been the subject of enforcement uncertainty, such as mining, staking, and wrapped assets.

However, the guidance ultimately remains an interpretive framework based on an existing statutory body of law, leaving core questions unresolved for those building, investing in and operating in the digital asset ecosystem. It does not provide new law, only clarity on how current regulators view the law. That falls short of a statement of what the law definitively is, leaving market participants exposed to future reinterpretation or reversal.

In practice, this means firms are still forced to make high-stakes decisions based on regulatory signals rather than durable rules. That dynamic discourages long-term investment and product development, which shapes how firms invest, hire and build.

While the guidance acknowledges that an investment contract is distinct from the underlying digital asset, it does not replace the underlying Howey framework as applied to primary and secondary digital asset sales, meaning the analysis remains subjective, fact-specific, and open to reinterpretation.  Under the current application of the Howey test, exchanges, brokers and market makers remain exposed to risk tied to tokens whose underlying investment contracts have not ended. The guidance suggests those contracts end once an issuer has fulfilled its promises or can no longer do so, but in practice, that standard is difficult to apply.

Secondary market participants are thereby given the enormous responsibility of determining who the issuer of a given token actually is, and analyzing the issuer's statements to determine what promises have been made and whether they have been fulfilled. This has a chilling effect on capital formation. The guidance acknowledges this problem, but it does not resolve it. Only legislation can do that.

The uncertainty surrounding the investment contract issue underscores the urgent need for a regulatory framework such as the CLARITY Act. Unlike the guidance's approach, CLARITY (as written in the current draft) introduces clear statutory definitions, particularly around "digital commodities," that builders can explicitly design for. It also provides a clear framework for when primary and secondary sales of digital commodities are exempt from securities laws.

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CLARITY directly addresses the secondary market problem left open by the guidance by establishing that qualifying secondary transactions in digital commodities are not treated as part of the original investment contract offering, removing one of the most significant sources of risk for exchanges, brokers, and digital asset holders. Enacting CLARITY would create the kind of predictable environment in which long-term investment decisions get made.

This is important for innovation because capital follows certainty. Firms won't experiment in an unclear digital asset market structure that exposes them to existential risk and massive liability. Today, that certainty increasingly exists outside the United States in jurisdictions with clear statutory frameworks. CLARITY positions the U.S. to compete globally by providing the predictable environment necessary for long-term investment and product development.

Absent statutory clarity, the United States risks entrenching a system in which innovation is shaped by litigation rather than transparent, predictable rules, slowing development and increasing systemic uncertainty. Institutional participation is deterred by continual ambiguity, and this limits liquidity, market depth and the overall maturation of domestic digital asset markets. At the same time, entrepreneurs and builders are increasingly drawn to jurisdictions with clearer regulatory frameworks, where they can launch and scale with greater confidence. This creates a growing opportunity for other markets to lead in areas such as tokenized assets and on-chain financial infrastructure, areas where the United States is well-positioned to compete, provided it establishes a more durable regulatory foundation.

The agencies have done what they can within the bounds of existing law. The rest belongs to Congress. Passing the CLARITY Act would provide the durable legal framework that market participants, investors and builders need to commit capital and build for the long term in the United States. The opportunity to lead is there, but it will not remain open indefinitely.