Last reviewed: May 8, 2026. CLARITY Act status: passed House, pending Senate Banking Committee markup.

The CLARITY Act is being sold as the bill that finally legalizes NFTs in America. That framing is wrong in two directions. It overpromises what’s been written into the bill, and it underestimates what’s already been settled, quietly, without any new law at all, over the last twelve months.

If you’re building an NFT project right now, you’re operating in a strange in-between. The most aggressive enforcement era in crypto’s short history ended in early 2025 when the SEC walked away from its investigations into OpenSea, Yuga Labs, Coinbase, and Kraken. The Digital Asset Market Clarity Act, which would lock that retreat into federal statute, passed the House in July 2025 and then got tangled up in Senate negotiations that are still unresolved as of spring 2026. So you don’t have new rules yet. What you have is a regulator that has revealed its preferences, a House-passed bill that signals where Congress is heading, and a Senate that’s still arguing about the details that will actually bind you.

This guide is for the people who have to make product decisions in that uncertainty: founders, marketplace operators, music NFT teams, anyone shipping something onchain that could plausibly be called an investment contract by someone with a law license and bad intentions. The goal here isn’t to summarize a bill. It’s to tell you what’s actually changed, what hasn’t, and what to do about it before the rules harden.

Where the bill stands, in one paragraph

Rep. French Hill introduced the CLARITY Act in May 2025. The House passed it that July with bipartisan support. The Senate Banking Committee released a 278-page draft in January 2026, the Senate Agriculture Committee advanced its version later that month, and a markup was targeted for late April. As of this writing, the two committee drafts still need to be reconciled before a Senate vote, and any Senate version then has to be merged with the House bill before it can become law. Realistic timeline: signed in late 2026 if the politics break right, with SEC and CFTC rulemaking taking another twelve to eighteen months after that. Most rules don’t bind anyone until 2027 at the earliest.

That means the version of the bill you’re reading today could change. It also means you have time — which is more useful than panic.

The three-bucket world CLARITY creates

The bill’s core move is to sort every digital asset into one of three buckets:

A digital commodity is a token whose value derives from the use of a blockchain network — Bitcoin, Ether, Solana, and a handful of others. Under CLARITY, these fall under exclusive CFTC jurisdiction. A joint SEC-CFTC interpretive release in March 2026 named XRP, alongside fourteen other assets, as digital commodities. That was a big deal: it removed those tokens from securities law coverage at the agency level, and CLARITY would codify that classification into federal statute, making it reversible only by another act of Congress.

An investment contract asset is a token sold to fund a project’s development, where buyers expect profit from the team’s work. These stay under SEC jurisdiction. CLARITY does include a transition mechanism — the “mature blockchain system” test, that lets a token graduate from investment contract to digital commodity once its underlying network is sufficiently decentralized. This is the formal codification of the old Hinman speech logic.

A payment stablecoin lives under the GENIUS Act, which already passed in 2025. USDC, USDT, and any other compliant fiat-backed token sit here.

NFTs are not, by default, in any of these buckets. They get their own carve-out — and that’s where things get interesting.

The “covered NFT” carve-out, decoded

The Senate discussion drafts include language stating that a “covered non-fungible token” is not an investment contract and not a transaction in a security. The bill also requires the Government Accountability Office to study NFTs and report back within a year of enactment, which is Congress’s way of saying we’re going to revisit this.

What likely qualifies as a covered NFT, based on the language and the negative-space precedent set by the SEC closures:

1/1 art and limited-edition digital collectibles

PFP collections (assuming they aren’t sold with explicit return promises)

Music NFTs that are pure ownership receipts without baked-in royalty streams

Membership and access NFTs that grant utility but not profit-sharing

Gaming NFTs whose value comes from in-game use, not from team-driven appreciation

What probably does not qualify, regardless of what label you put on the front-end:

Fractionalized NFTs. F-NFTs are fungible by design, you’ve just sliced one asset into many identical claims. Several lawyers I’ve spoken to read the carve-out as deliberately not extending to these structures, and the SEC has hinted at the same in past statements. (The same logic explains why proposals like Canary Capital’s NFT-themed ETF sit in a different regulatory bucket entirely.)

NFTs marketed as investments. If your Discord, your launch deck, or your X bio uses the words “floor price will go up,” “returns,” or anything that smells like a yield pitch, you’ve moved yourself out of the carve-out and into Howey Test territory.

NFTs with revenue-share or profit-distribution mechanics. Smart contracts that send a cut of secondary sales, marketplace fees, or external revenue back to holders are exactly what the Howey Test was designed to catch. The DraftKings NFT class action, which survived a motion to dismiss in 2024, is the leading example of what happens when a sportsbook-themed NFT crosses this line.

NFTs paired with utility tokens that pump on the team’s efforts. ApeCoin survived because the broader Yuga Labs ecosystem was decentralized in ways most newer projects aren’t. Your token won’t get the same benefit of the doubt.

The label doesn’t save you. The economics do. The SEC made this point loudly in 2023 when it called the Stoner Cats NFTs “purported” non-fungible tokens, meaning the agency reserves the right to look past whatever you’ve called your asset and examine what it actually does.

The piece nobody is writing about: what the SEC’s 2025 retreat actually told us

CLARITY is the bill people talk about. The SEC closures of early 2025 are the events that actually changed what’s enforceable today. Read together, they form a working playbook for what the agency considers acceptable, and that playbook will outlast any specific bill.

Look at the cases the SEC chose to bring versus the ones it walked away from.

Impact Theory (settled, 2023, $6 million fine): the company sold “Founder’s Keys” NFTs and openly told buyers the proceeds would build a Disney rivalling media empire and that the keys would appreciate as the company grew. Textbook investment contract.

Stoner Cats (settled, 2023, $1 million fine): an NFT collection tied to an animated web series, marketed with explicit promises about how holders would benefit from the project’s success. Add restrictive IP licensing, holders couldn’t commercially use their cats,and the SEC had a clean case. Wilson Sonsini’s post-mortem on these enforcements is still the cleanest practitioner read.

Flyfish Club (cease-and-desist, 2024): a private restaurant funded by NFT memberships, marketed in ways that emphasized return-on-investment. The SEC didn’t care that the underlying utility was a real, physical restaurant. The marketing was the problem.

Yuga Labs (closed without charges, March 2025): three-year investigation into Bored Ape Yacht Club and ApeCoin. The agency walked. We covered the closure and what it signaled for digital collectibles in our March 2025 piece.

OpenSea (closed without charges, February 2025): the marketplace got a Wells Notice in August 2024, raised a $5 million creator defense fund, prepared for a fight, and never had to use it. (We covered the original Wells Notice here.)

The pattern is legible. The SEC pursued projects where the marketing made the investment-contract case for them. It abandoned projects that had decentralized in meaningful ways and let holders extract their own value. Astraea Counsel’s in-depth analysis of the retreat is worth the read if you want the full caselaw walk-through.

The Yuga Labs blueprint

If you want a working template for what survives a multi-year SEC investigation, study what Yuga did. Four design choices matter, and you can copy them.

One: full commercial IP rights to holders. Bored Ape owners can use their apes commercially, for clothing lines, restaurants, beer brands, books, films. There’s a documented list of dozens of holder-built businesses, and lawyer Edward Lee has called this the “decentralized Disney” model. The SEC’s case was harder to make precisely because Yuga didn’t keep the upside for itself. Compare this to Stoner Cats, where holders got a personal-use license and nothing else. The IP licensing decision is upstream of the securities analysis.

Two: brand decentralization. By the time the SEC closed its investigation, BAYC was a globally recognized brand whose value didn’t depend on Yuga’s roadmap execution. Holders had built more cultural equity than the company had. That’s hard to fake on day one, but you can architect for it. Don’t make your roadmap the price floor.

Three: distributed ownership and control. Thousands of holders, no central group exercising control, an independent ApeCoin DAO managing the token side. Each of those weakens the “efforts of others” prong of Howey.

Four: separate the NFT from the token. ApeCoin and the apes are legally distinct animals. They sit in different parts of the regulatory map. Builders who blur this — who make their fungible token’s price the implicit promise behind their NFT, are taking on both kinds of risk at once.

You don’t have to be Yuga’s size to apply this. You have to be deliberate about which of these design choices you’re making, and which you’re punting on.

What CLARITY does to NFT marketplaces

This part has been undercovered, and it matters.

Title III of the bill creates registration categories for digital commodity exchanges, brokers, and dealers — all under the CFTC. A pure NFT marketplace that lists only covered NFTs probably escapes this entirely. But a marketplace that lists mixed inventory, NFTs alongside fungible tokens, tokenized real-world assets, or anything that crosses the digital commodity line,  is suddenly looking at dual-regulator obligations. CBIZ has a useful breakdown of how the dual SEC/CFTC framework reshapes platform compliance.

Three practical questions every marketplace operator should be asking right now:

If your platform lists one tokenized real-world asset tomorrow, do you trip into broker-dealer registration? If you offer custody, do you meet the qualified custodian standard CLARITY would impose? If you operate any kind of automated market making for NFTs, does Section 309’s DeFi exclusion cover you, or does it only cover fully decentralized protocols?

None of these have crisp answers yet. They have lawyer-shaped answers, which means expensive ones. The marketplaces that will look smart in 2027 are the ones that are scoping these questions now, while there’s still time to architect around them rather than retrofit.

The state-level problem nobody’s talking about

Here’s the angle most CLARITY explainers miss. Even if the bill passes exactly as drafted, your state attorneys general retain authority over NFTs.

The North American Securities Administrators Association, the umbrella group for state securities regulators, sent a strongly worded letter to the Senate in January 2026 opposing parts of CLARITY for weakening state authority. Section 308 of the bill exempts digital commodities from state securities laws. But NFTs aren’t digital commodities under the carve-out. They’re their own thing. Which means state regulators retain full power to act on them.

Practically, this means an NFT project that’s perfectly compliant with federal CLARITY rules could still face action under California’s Department of Financial Protection and Innovation, the New York Department of Financial Services, or the Texas State Securities Board. Each has its own track record and its own appetite for crypto cases. New York DFS in particular has been more aggressive than the SEC at moments, and the BitLicense regime is its own mini-jurisdiction.

If you’re a U.S.-facing NFT project, the fifty-state patchwork doesn’t go away when CLARITY passes. It might even get more important, because states are watching the federal preemption fight closely and some will sharpen their teeth in response. The artists’ lawsuit against the SEC, filed in 2024 by Brian Frye and Jonathan Mann, is a useful reminder that the legal pushback is moving from multiple directions at once.

What to actually do, before the bill becomes law

Forget what CLARITY will require. Look at what the 2025 enforcement closures already revealed about what’s safe and what isn’t. That gives you a working compliance posture you can implement this quarter.

Audit your marketing copy. Read your own website, your Discord pinned messages, your X bio, your Mirror posts, your launch deck. Strip every sentence that promises returns, appreciation, or “investment-grade” anything. The single most consistent factor in the SEC’s losing cases was marketing language, not the underlying product. This is free to fix and disproportionately protective.

Document your IP licensing in plain English. If you haven’t decided whether holders get commercial rights to their NFTs, decide now. CC0, the NFT License 2.0, or a custom commercial license — pick one and post it visibly. The Yuga case is the strongest evidence we have that broad commercial rights to holders shifts the legal calculus in your favor.

Don’t fractionalize without a securities attorney in the room. Fractional NFTs are the single biggest legal trapdoor in the current carve-out. The economics map almost perfectly onto a traditional security, and no realistic reading of the bill protects them. If your product idea requires fractionalization, get the legal structure right before you ship.

Map your custody flow. Know whether you’re custodial, non-custodial, or hybrid. The qualified-custodian rules under CLARITY are going to ripple through marketplace UX in ways that affect onboarding, withdrawals, and KYC. Wallet-connect-only architectures get the easiest treatment.

Separate any utility token from your NFT, legally. Even if they’re linked in your product, treat them as different assets in your terms of service, your tokenomics doc, and your vesting schedules. This is the part most projects get lazy about, and it’s the part that creates the worst optionality if regulators get aggressive again.

Start your state compliance map. It’s cheaper than reactive remediation. Even a basic spreadsheet listing the five states most likely to send you a letter, along with their recent crypto enforcement history, puts you ahead of most projects.

The decision tree

A simple version you can screenshot and share with your team:

Does your NFT

  YES → Likely a security. Talk to counsel.

  NO  → Continue.

Are your NFTs structured as fractional ownership of a single asset?

  YES → Likely a security. Counsel before launch.

  NO  → Continue.

Is your floor price tied to a roadmap your team controls?

  YES → Howey risk. Restructure the marketing or the roadmap.

  NO  → Continue.

Do holders get full commercial IP rights?

  YES → Strongest position under CLARITY + Yuga precedent.

  NO  → Defensible, but document your utility carefully.

This is not legal advice. It’s a triage tool. The yes/no answers tell you where you’re rolling the dice and where you’ve actually got a defensible position.

What CLARITY doesn’t fix

Even if the bill passes intact, several big questions remain open. Worth knowing what’s still on the table.

Royalty enforcement. The bill is silent on creator royalties. That’s a contract and IP problem, not a securities problem, and it’s still going to be fought out in marketplace policy and state IP law — as the OpenSea-Yuga royalty standoff showed.

AI-generated NFTs. Federal copyright status of AI-generated work is still being litigated separately. CLARITY doesn’t touch it. If your NFT project uses generative AI for the underlying art, you have a parallel legal track to manage.

Cross-chain treatment. Which jurisdiction governs a Solana NFT held in a U.S. wallet bought via a marketplace incorporated in Singapore? CLARITY doesn’t really say. Conflict-of-laws questions in crypto are still mostly improvised.

The mandated GAO study. Twelve months after enactment, the GAO has to deliver a comprehensive NFT report to Congress. That report could trigger a second wave of rulemaking. Anything you build between now and then is being built on a floor that might shift again.

Staking and yield mechanics. The Senate’s anti-yield text, currently in the draft to prevent stablecoin issuers from offering interest, could get drafted broadly enough to swallow staking-style NFT mechanics where holders earn rewards for locking their assets. Watch this language carefully through markup.

Quick answers to what builders ask most

Has the CLARITY Act passed? Not yet. It cleared the House in July 2025 and is sitting in the Senate. Best case for passage is late 2026.

Are NFTs securities under the CLARITY Act? Most “covered NFTs”,  collectibles, art, membership tokens, utility NFTs without revenue-share, are explicitly excluded from the definition of a security. Fractionalized NFTs and NFTs explicitly marketed as investments are not protected.

What is a “covered NFT”? A non-fungible token that the bill’s discussion draft places outside the definition of an investment contract or security. The exact qualifying criteria are still being negotiated in committee.

Do NFT marketplaces need to register under CLARITY? Pure NFT marketplaces probably don’t. Marketplaces that list mixed assets, NFTs plus fungible tokens, RWAs, or stablecoins, likely face new registration obligations as digital commodity exchanges or brokers.

Did the SEC really stop pursuing NFT cases? It dropped the high-profile ones, Yuga Labs, OpenSea, without charges in early 2025. It hasn’t formally said it won’t bring new ones. The standard from the cases it did win, like Impact Theory and Stoner Cats, remains good law.

Do state regulators still matter? Yes, more than most coverage suggests. NASAA is fighting to preserve state authority, and the federal carve-out for digital commodities does not extend to NFTs. Multi-state compliance is still real.

When does CLARITY actually kick in for builders? Even if signed in late 2026, SEC and CFTC rulemaking takes another twelve to eighteen months. Practical effect on most NFT projects probably lands in 2027.

Where this leaves you

The honest read on the CLARITY Act for NFT builders is this. The legal floor under the industry is firmer than it was eighteen months ago, and it’s likely to get firmer still. But the firmness is partial. The carve-out is real but narrow. The Howey Test still bites projects that market themselves into a corner. State regulators retain power the federal bill doesn’t touch. And the bill itself isn’t law yet, which means anything you build today is being built against a moving target.

That’s actually fine. The builders who came out of 2025 cleanest weren’t the ones who waited for perfect rules. They were the ones who read the SEC’s revealed preferences correctly, designed conservatively, and didn’t market themselves into trouble. The same posture works now. Build like CLARITY is going to pass roughly as drafted, design like the Howey Test will outlive it, and document your decisions well enough that a regulator coming through in 2028 can see what you were trying to do.

For more on where the NFT space is heading post-enforcement era, see our piece on the five ways NFTs are rebuilding around utility in 2025.

Bookmark this guide. We’ll update it after every Senate markup and again whenever the bill moves.