Senate Banking Committee Advances CLARITY Act: Why Decentralized Networks Deserve Their Own Legal Category

For more than a decade, the United States has governed one of the most transformative financial technologies in history with a patchwork of rules designed for a different era. On May 14, 2026, the Senate Banking Committee voted on a bipartisan basis to advance the Digital Asset Market CLARITY Act — a milestone that, according to Miles Jennings, General Counsel at Andreessen Horowitz (a16z), deserves far more attention than it has received. In a detailed analysis, Jennings argues that the Act is not a gift to the crypto industry but a long-overdue recognition that the current regulatory failure is unsustainable — and that its cost falls not just on entrepreneurs, but on every American who stands to benefit from the next generation of open digital infrastructure.

A Decade of Regulatory Failure — and Its Consequences

To understand why CLARITY matters, Jennings argues, one must first understand what the absence of clear rules has actually produced. Without a comprehensive regulatory framework, U.S. agencies have had to improvise — relying on existing statutes never designed with blockchain networks in mind. The result, in his assessment, has been a constantly shifting legal landscape where rules changed without warning, often through enforcement actions rather than rulemaking.

This approach, Jennings contends, has failed on every front. It has failed consumers, leaving them exposed to the very harms regulation is supposed to prevent. It has failed responsible builders, who faced the impossible choice of navigating legal ambiguity at enormous cost or moving operations abroad. And it has failed American competitiveness — handing the European Union, with its MiCA regulation, and the United Kingdom an opportunity to set the global standard before the United States could act.

The damage, Jennings insists, is real even if hard to quantify. He poses a pointed counterfactual: what would the U.S. economy look like if Amazon, Apple, Google, and Microsoft had been founded in jurisdictions more hospitable to innovation? American technological dominance, he reminds us, was never inevitable — it was the product of legal frameworks that allowed entrepreneurs to take risks and build for the long term. Blockchain networks, he argues, deserve the same opportunity. Most troubling of all, in Jennings’ view, is that the regulatory vacuum has not kept bad actors out of the market — it has invited them in, while subjecting legitimate builders to what he calls “regulation-by-enforcement”: a process that substitutes litigation for rulemaking and chills exactly the kind of innovation the country needs.

Why Networks Are Different — and Why the Law Must Recognize That

The deeper case for CLARITY, as Jennings frames it, is not merely about correcting past failures. It is about recognizing a fundamental shift in what can now be built — and ensuring that American law does not actively prevent the best version of that future from emerging.

The United States has spent over a century developing sophisticated legal frameworks for companies, Jennings acknowledges. Those frameworks work well for what they were designed to support: ventures with identifiable managers, clear ownership structures, and persistent control. But blockchain networks, he argues, are not companies. They are a fundamentally different kind of coordination mechanism — one that distributes control rather than concentrating it, operates through transparent rules rather than managerial discretion, and functions as shared infrastructure rather than proprietary property. When legal frameworks built for companies are applied to networks, Jennings warns, those networks become distorted: control concentrates where it was supposed to be diffuse, intermediaries emerge where the technology was designed to eliminate them, and value flows to the center rather than to participants at the edges.

This is not a theoretical problem, Jennings emphasizes. Across the digital economy, corporate networks — payment systems, marketplaces, social platforms, app stores — capture a disproportionate share of the value created by the people who depend on them. A ride-share driver earns a fraction of the fare; a musician earns pennies on the dollar from their own work. Blockchains, he argues, offer a genuine alternative: systems with transparent rules, distributed control, and economic models that allow value to flow to participants rather than only to intermediaries. The CLARITY Act, in Jennings’ reading, is designed to make that alternative legally viable — drawing on existing commodities and securities law, clarifying the jurisdictional boundary between the SEC and the CFTC, and crucially giving blockchain networks a legal pathway to launch, raise capital, and operate in the United States without being forced into corporate structures that undermine their core value. That, he is careful to note, is not deregulation. It is appropriate regulation — designed for what blockchain networks actually are.

Why This Moment Cannot Be Wasted

The bipartisan support behind CLARITY — the House version passed 294 to 134, with 78 Democrats in favor — reflects a decisive political shift, Jennings argues. This is no longer a debate about whether blockchain technology deserves a regulatory framework. It is a debate about what that framework should look like. The stakes, in his view, extend well beyond the crypto industry. As an increasing share of economic life becomes mediated by digital systems shaped by AI and platform monopolies, the question of whether that infrastructure will be open or closed, centralized or distributed, becomes one of the most consequential of the coming decade. Prior platform shifts — personal computing, mobile, the internet — each produced enormous concentrations of power, with a small number of companies controlling technologies that billions of people depend on.

Decentralized blockchain networks offer a different path, Jennings contends — infrastructure that cannot easily be rewritten, censored, or redirected by any single actor. Whether that path becomes viable at scale depends, in significant part, on whether the U.S. legal environment supports or forecloses it. The opportunity, he warns, will not wait indefinitely. Other jurisdictions are building their frameworks. American entrepreneurs who cannot find clarity at home will find it elsewhere — and the cost of that outcome will be borne not by the crypto industry alone, but by the United States as a whole.

The Senate Banking Committee has done its part. The rest of the process — a floor vote, House approval, and the President’s signature — must follow. As Jennings puts it, the cost of inaction is a future in which American innovation in one of the most important technological shifts of our time happens somewhere else, under someone else’s rules, on terms that serve someone else’s interests. That, he concludes, is not a future the United States can afford.

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