The CLARITY Act would establish a federal regulatory framework for cryptocurrency and other digital assets, spelling out how the industry would be regulated and which federal agencies would have authority over different types of assets.

The legislation would divide oversight between the Securities and Exchange Commission and Commodity Futures Trading Commission, creating a distinction between digital assets that are considered securities and those treated as commodities. Supporters say the change would replace what they describe as the SEC's previous "regulation-by-enforcement" approach with clearer rules for the industry.

The bill would also require certain digital asset offerings and sales to provide investors with specific public disclosures. It would create a new exemption from SEC registration, called "Regulation Crypto," allowing qualifying digital asset projects to raise money from the public while complying with specific disclosure and regulatory requirements.

Other provisions are intended to prevent companies from structuring projects to evade securities laws and would restrict insiders from reselling assets in ways that could facilitate pump-and-dump schemes or market manipulation. The legislation would also provide legal certainty for digital assets that U.S. courts have already determined are not securities.

Senate Banking Digital Assets Subcommittee Chair Cynthia Lummis (R-Wyo.) said in late July that she supported the legislation.

"This is another step in my years-long journey to ensure the U.S. leads the way on digital assets," Lummis said in a press release.

 "The U.S. has always been at the forefront of financial innovation, and the coming weeks are likely the last real chance we will have for years to get this right."

Sen. Elizabeth Warren (D-Mass.) is among the lawmakers opposing the bill.

"Our job is not to advance a pro-industry crypto bill that will put American consumers, investors, our national security and our financial system at risk," Warren said in a statement in May.

Warren said Congress should be working on kitchen-table issues, such as capping interest rates on credit cards and preventing big banks from charging overdraft fees.