In the evolving landscape of digital finance, the CLARITY Act (H.R. 3633), which passed the House in July 2025 and is now under consideration in the Senate, seeks to establish clear regulatory frameworks and enhanced disclosure requirements for digital assets. The legislation aims to facilitate the integration of America’s capital markets, potentially migrating significant value onto public blockchains, by providing structure for securities, stablecoins and decentralized finance (DeFi). The SEC’s approval of Nasdaq’s rule change to allow the trading of tokenized securities, clearing the path for equities, ETFs and Treasuries to migrate onto distributed ledger infrastructure, confirms that this transition is no longer speculative. Together, GENIUS and CLARITY clear the way for what may become the most consequential structural shift in financial history: the on-chain migration of the U.S. capital markets, estimated at $500 trillion in notional value. That migration makes the use of public blockchains by regulated intermediaries, banks that will perform the bulk of digital asset issuance, a matter of public policy and consumer protection and not merely capital markets efficiency.
CLARITY Act objectives and blockchain integration
Building on the GENIUS Act of 2025, the CLARITY Act delineates jurisdictional responsibilities between the SEC and CFTC whilst mandating robust disclosures. Supporters highlight its potential to enable real-time settlements through stablecoins and smart contracts, fostering efficiency and cost reductions estimated in the hundreds of billions across U.S. business lines. A June 2025 memo from discussions involving the SEC’s Crypto Task Force, Auditchain Labs AG, and Rutgers Business School, underscores initiatives to implement machine-readable disclosures for stronger investor protections. That public policy dimension extends well beyond investors. When banks, licensed and backstopped by public resources, issue digital assets on the same public blockchains used by ordinary people for everyday payments, the structural integrity of those networks becomes a matter of shared public concern. Shared public networks demand shared public policy. Conflicts of interest arising from concentrated bank control over validation, MEV extraction and transaction ordering do not stop at the boundary of investment activity - they affect every competitor, developer and deployment that depends on the integrity of the same infrastructure.
New categories of material information unique to digital assets
Recent coordinated comment letters filed with the FDIC, OCC, and SEC emphasize the importance of tailored disclosures for digital assets. These proposals introduce several new categories of material information that are unique to blockchain environments and not typically addressed in traditional securities filings:
- Blockchain network participation (BNP) - activities such as mining, staking and governance participation by stablecoin issuers or their affiliates.
- Maximal extractable value (MEV) risks - mechanisms by which validators (miners in proof-of-work or stakers in proof-of-stake) can re-order, insert or censor transactions within blocks.
- Validator concentration and network dependencies - details regarding concentration of hash power or stake, potential censorship risks and broader blockchain infrastructure dependencies.
- Smart contract and technical vulnerabilities - enhanced reporting on blockchain-specific risks, including smart contract code exposures and operational fragilities.
The FDIC filing, for example, proposes a detailed 148-question questionnaire and a 125-element XBRL taxonomy focused on BNP activities. Similarly, the SEC Regulation S-K reform comments advocate extending Inline XBRL tagging to include these blockchain-related elements. These new disclosure categories are designed to provide investors and users with clearer visibility into the unique operational and technical dimensions of digital assets operating on public blockchains.
MEV and related considerations
MEV refers to the ability of blockchain validators to extract additional value by strategically ordering transactions within blocks. Whilst common in public blockchains, its implications become more significant as trillions in value potentially migrate to these networks under the CLARITY framework. The filings appropriately call for transparent disclosure of BNP activities to help investors and users assess risks, including potential market manipulation, hidden leverage or regulatory arbitrage. The SEC S-K proposal notes that validator concentration could influence transaction ordering or network performance, particularly under stress.
Insights from recent research
An MIT study on stablecoins released during the preparation of the regulatory filings examines technological factors that could affect asset transferability and redemption. It highlights potential bottlenecks in blockchain infrastructure during periods of high demand or redemption surges, underscoring the value of integrated governance approaches to maintain stability and transferability, even for well-backed assets.
Ensuring accessibility and mitigating risks
As institutions engage more deeply with public blockchains - potentially through expanded digital asset custody frameworks under OCC chartering amendments, there is an opportunity to monitor computational demands, transaction fees and equitable access. Effective MEV mitigation strategies, transparent BNP disclosures and measures to address validator concentration can help preserve the public and inclusive nature of these networks whilst supporting overall market stability. The filings stress that such disclosures enable informed decision-making by investors and users.
Shared public networks: a matter of shared public policy
The on-chain migration of the $500 trillion U.S. capital markets is a structural transformation of the public infrastructure on which the public transacts, develops and builds. Banks (regulated intermediaries with access to public liquidity facilities and federal backstops) will perform the bulk of digital asset issuance under the GENIUS and CLARITY frameworks. They will also participate as validators, stakers and governance voters on the same public networks used by the general public.
The public policy implications of that dual role are profound. Safety and soundness is no longer a concern limited to the issuing institution’s balance sheet. It extends to the structural integrity of the networks on which those institutions operate and share with the public. Undisclosed conflicts of interest, where a bank simultaneously issues a stablecoin and influences the validation of the network on which that stablecoin settles, are not merely an investor protection problem. They are a systemic risk to the integrity of the public infrastructure itself. It is incumbent upon regulators to mandate the disclosure of Blockchain Network Participation activities by all issuers and intermediaries, including banks, as a matter of sound public policy. The beneficiary of that mandate is not only the investor. It is the independent developer deciding which network to build on. It is the payment service provider choosing which infrastructure to trust. It is the retail user who transacts on a network without knowing that a small group of regulated institutions control a disproportionate share of validation capacity or governance voting power. If these gaps in disclosure are not addressed, the public, meaning everyone operating on public blockchains other than the institutions with disclosure obligations, is left vulnerable to centralization risks that can lead to computational infeasibility and expense. Moving from bank vaults and closed systems to public blockchains requires regulators to change how they think about regulation. The failure to mandate BNP disclosure leaves regulators without the information necessary for effective and efficient oversight.
The path forward
The CLARITY Act, supported by these detailed filing proposals, represents an opportunity to establish comprehensive, blockchain-specific disclosure standards. By prioritizing these new categories of material information unique to digital assets, regulators, issuers and market participants can work toward realizing the efficiency benefits of blockchain technology whilst thoughtfully addressing its distinct risks. That work must now extend beyond the traditional investor-protection mandate to encompass the full constituency of public blockchain participants: developers making infrastructure deployment decisions, payment service providers choosing settlement rails and ordinary users transacting on networks they cannot inspect. Mandatory, machine-readable BNP disclosures, structured as XBRL-tagged data available in real time, give every participant in that ecosystem the information they need to make informed decisions and give regulators the data infrastructure necessary for proactive oversight. The SEC’s approval of Nasdaq’s tokenized securities trading, the DTCC pilot, and the capital commitments of Blackrock and Fidelity confirm that the on-chain migration of the $500 trillion U.S. capital market has moved from hypothesis to operational planning. The regulatory frameworks built now will determine whether that migration preserves or undermines the structural integrity of the public networks on which it depends.
In his 2026 Chairman letter, Larry Fink, CEO of the world’s biggest asset manager, Blackrock, once again spoke about the opportunities for capital markets to embrace tokenization. Indeed, Fidelity’s chief investment officer has gone on record discussing how Fidelity is looking at expanding asset tokenization. If Wall Street normalizes tokenized assets, pressure will intensify on European, Asian and emerging-market exchanges to respond. Liquidity gravitates toward the most efficient rails; if tokenization compresses settlement risk and expands global participation, competing jurisdictions may be forced into regulatory acceleration simply to retain capital flows. The result could be a new phase of financial globalization: not defined by listing venues, but by which market offers programmable, always-on liquidity first with adequate transparency.
This article first appeared in Digital Bytes (7th of April, 2026), a weekly newsletter by Jonny Fry of Team Blockchain.