Key legal updates for July

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Today’s legal update covers:

1/3: Market Structure, Revised and Titled ‘Clarity Act’

A few weeks after the draft market structure bill was published, it was formally introduced as the Digital Asset Market Clarity (CLARITY) Act. As we noted at the time, the bill aims to create a regulatory framework for digital assets in the U.S. 

The 236-page Clarity Act included certain changes from its unnamed predecessor, including:

• Blockchain previously required the ledger to be "distributed among network participants in an automated fashion," whereas the emphasis on the automated nature of the ledger is removed in the updated version, so data must only be “propagated among network participants to reach consensus.” This allows for broader recognition of different consensus mechanisms.
  

• Thresholds for achieving a mature blockchain system — which provides projects with exemptions from certain disclosures — are more explicitly defined, providing projects with the details on how to achieve certified maturity.
  

• Additional detail was added to the definition of DeFi protocols, with the requirement that “no other person is necessary” to execute the financial transaction removed. It was replaced with phrasing that transactions must execute “without reliance on any other person to maintain control of the digital assets of the user during any part of the financial transaction.” 

Five Republicans and three Democrats co-sponsored the bill, which passed both the House Committee on Agriculture and the House Committee on Financial Services. The debate now is whether the Clarity Act can be combined with the GENIUS Act, which many believe would give market structure legislation the best chance of passing. More on that below.

You should know: If you operate or plan to launch a blockchain project, now is the time to evaluate your protocol’s consensus mechanisms and maturity thresholds against the Clarity Act’s updated definitions. Projects that can clearly demonstrate maturity may qualify for reduced disclosure obligations and fewer regulatory hurdles. Work with legal counsel now to document how your technology satisfies the bill’s detailed criteria, so you’re prepared if the Clarity Act or a combined bill passes.

2/3: What’s Next After GENIUS Act Passes Senate

After the U.S. Senate passed the GENIUS Act, the stablecoin legislation moved to the U.S. House of Representatives, where it currently awaits a full vote. The reason for the delayed vote is likely twofold:

1. The House has its own version of stablecoin legislation (the STABLE Act), which is similar to GENIUS but differs in certain respects, particularly with regards to the role state regulators play.
   

2. House members believe that combining the GENIUS and Clarity Acts gives market structure legislation its best chance, with House Majority Whip Tom Emmer suggesting to PunchBowl News that GENIUS would pass the House “so long as it’s accompanied by the CLARITY Act.”

White House Crypto and AI Czar David Sacks posted on X that he expects GENIUS to be signed in July, with market structure to come later, while President Trump posted that the House should pass an unchanged version of the GENIUS Act as soon as possible. Bloomberg reported that the House is planning a single vote to move both bills. 

You should know: The House is signalling that the GENIUS and Clarity Acts will likely be combined into a single bill that could quickly become law. For stablecoin issuers, review your reserve, custody, and state licensing practices to ensure they meet the stricter standards expected under these Acts. For everyone else, taking proactive steps today can help your business avoid rushed changes and potential enforcement when new rules are enacted.

3/3: Judge Denies Settlement Request by SEC and Ripple

The Securities and Exchange Commission and Ripple Labs had both appealed the landmark decision by Judge Torres, which held that XRP sales on public exchanges were legal but sales to institutional investors were not. That decision was accompanied by a $125 million penalty and an injunction preventing Ripple from future institutional sales of XRP.

The SEC and Ripple recently agreed to settle their respective appeals if Judge Torres reduced the penalty and dissolved her injunction.

But Judge Torres denied their request, stating that while the SEC has discretion to change its position, the parties failed to show the exceptional circumstances required to justify a settlement that would allow them to not be bound by her decision:

"The parties do not have the authority to agree not to be bound by a court's final judgment that a party violated an Act of Congress in such a manner that a permanent injunction and a civil penalty were necessary to prevent that party from violating the law again."

Ripple has dropped their appeal, and likely expects the SEC to follow suit.

You should know: For blockchain companies facing or anticipating enforcement, this ruling shows that once a court issues an injunction or penalty, it’s extremely difficult to negotiate around it. Don’t assume a private deal with regulators can override a judge’s order. If you receive a Wells notice or enforcement action, proactively engage experienced securities counsel before litigation reaches judgment — early negotiation remains your best chance to shape outcomes.

If you have questions about how this impacts your specific project, let's talk. We're in your DMs on Telegram, Discord, Slack — wherever you prefer — and are ready to provide practical advice.

Talk soon.

Nick Pullman
Day One Law

This article is for informational purposes only and is not legal advice. Please consult with an attorney at Day One Law Corp regarding your specific situation.