a16z: The US Needs to Pass the CLARITY Act to Seize Standard-Setting Authority for Stablecoins and Tokenization

Author: a16z Crypto

Compiled by: TechFlow

TechFlow Editor's Note: The GENIUS Act caused the stablecoin market to surge 50% in half a year and attract $13 billion in investment, proving that clear regulation can unleash rather than stifle innovation. However, stablecoins account for only 15% of the crypto market, and the blockchain networks supporting them still lack federal rules—this is like regulating smartphones but ignoring cellular networks. The CLARITY Act aims to fill this gap, determining whether the U.S. can dominate the next generation of financial infrastructure just as it dominated the internet.

Every generation has the opportunity to upgrade infrastructure.

The 1990s were about the internet. Policymakers worried it would disrupt existing industries and create new risks. But instead of forcing this technology into outdated regulatory frameworks, they established rules that allowed innovation to flourish while protecting consumers. The result was one of the greatest periods of economic growth in U.S. history.

Today, we face a similar opportunity with blockchain networks. Stablecoins make payments faster and cheaper. Tokenization is modernizing capital markets. Both rely on blockchain infrastructure.

These technologies will advance regardless of whether Congress acts. Whether the U.S. sets the standards or cedes this ground to others depends on itself.

The GENIUS Act Proves Clear Rules Work

The GENIUS Act demonstrates what thoughtful policy can achieve. Stablecoins are digital dollars that move across the internet as easily as bits. Sending $200 from the U.S. to Colombia through traditional channels might cost over $12 and take days. With stablecoins, the same transfer settles in seconds for just a few cents.

Regulatory uncertainty hindered stablecoin adoption for years. The GENIUS Act changed this. By establishing reserve requirements and an issuer framework, it eliminated all confusion and unleashed growth.

The results speak for themselves. The stablecoin market size is approximately $315 billion, growing over 50% compared to a year ago, with USD-backed tokens becoming one of the fastest-growing channels for U.S. currency overseas. According to Visa, stablecoins processed $100 trillion in transaction volume over the past 12 months. Major institutions—including JPMorgan, Citi, Visa, Mastercard, and BlackRock—are engaging more deeply with blockchain infrastructure.

The key is that the U.S. dollar is winning. Millions of people globally who lack easy access to traditional USD accounts can now hold and trade digital dollars via software wallets. Clear rules help anchor this new system to U.S. standards and institutions, rather than competitive alternatives.

GENIUS proves that smart regulation expands markets rather than restricting them. But it only solves part of the problem.

Blockchain Networks Still Lack Rules

Stablecoins account for less than 15% of the crypto market by market cap, but they rely on the remaining 85% of underlying blockchain networks, which still lack a coherent federal framework. This is equivalent to regulating smartphones while ignoring cellular networks.

The CLARITY Act corrects this.

The core of CLARITY is to provide clear rules for blockchain networks and define regulatory responsibilities for the digital asset market. It incentivizes transparency, reduces risk, and fosters competition under a set of common standards. It helps prevent the next FTX disaster by empowering regulators to oversee intermediaries using mature principles from traditional finance—proper custody, segregation of customer assets, and adequate disclosure. It also opens the door for the next wave of institutional adoption.

Major companies are already taking action. BlackRock has launched tokenized funds. JPMorgan is building a blockchain-based payment system. The DTCC, custodian of $114 trillion in assets, is preparing to scale tokenized securities through the Canton Network. CLARITY removes barriers to entry, providing a clear path for traditional finance to participate compliantly. This benefits not only the crypto industry but also consumers, investors, and the long-term competitiveness of U.S. capital markets.

The Choices Before Us

History shows that open, neutral platforms governed by clear rules create the most value. The internet succeeded because entrepreneurs knew the rules of the game. They could build, attract capital, and compete based on merit rather than regulatory speculation. Blockchain networks should be given the same opportunity.

The opposition between regulation and innovation is a false dichotomy. GENIUS has already disproven this: in the second half of 2025—after GENIUS was signed into law—over $13 billion flowed into crypto startup investment, nearly double the $6.9 billion invested in the first half of that year before GENIUS. Meanwhile, forecasts show the tokenized asset market will grow 100x in the coming years. The real choice is between certainty and uncertainty, whether the U.S. can assert its leadership and build the future domestically, or watch it be built elsewhere.

No law is perfect, and the CLARITY Act is no exception. The reality is that crypto currently has no consumer protections. CLARITY puts these protections in place. Like any bill, no one gets everything they want, but the version released today will move the industry forward. It reflects months of bipartisan negotiations and significant compromises from the industry. Regardless of any imperfections, the CLARITY Act is clearly better than continuing with absolutely no safeguards.

The decisions Congress makes this year will determine where the next era of financial infrastructure will flourish and who sets the rules. If the CLARITY Act passes, it will put the U.S. ahead again, just as it did with the commercial internet. Inaction means innovation will migrate elsewhere, proceeding under frameworks designed by others.