Congress Provides No “Clarity” on Meme-Coin Regulation

On May 29th, 2025, Representative J. French Hill of Arkansas introduced H.R. 3633, the Digital Asset Market Clarity Act, more commonly referred to as the “Clarity Act.” (House Roll Call Vote No. 199, Congress).  The Clarity Act intends to create a clear regulatory framework for the cryptocurrency marketplace. (Lathan & Waktins LLP). The bill seeks to create protections to ensure investors are properly informed and protected from losses due to fraud. Mercedes Reed, Better than Clarity: The Case for a Function-Based Crypto Regulatory Framework, 26 Wyo. L. Rev. 401, 406 (2026). Of particular concern are meme coins — highly volatile investments often released and supported by celebrities — including DOGE and BONK among others. (Michael Adams, Forbes). To illustrate, investors in President Trump’s $TRUMP meme coin collectively lost $3.81 billion. (Eric Lipton and David Yaffe-Bellany, NY Times). As more celebrities create their own meme coins, the need for the Clarity Act and its regulatory framework grows. (Judy Lagrou, Bloomberg Law). This article examines why Congress should pass the Clarity Act. To ensure that an industry that has already led to great losses is not allowed to proceed unchecked.

To achieve its regulatory goals, the Clarity Act first categorizes digital assets as securities, commodities, and stablecoins, although this approach is not without its detractors. (Eric Forni, et al., Law360). The Act establishes a procedure for the categorization of assets with each digital asset beginning as a “security” under the guidance of the Securities & Exchange Commission (“SEC”). Bepi Pezzulli, The Post-Dollar Dollar: The United States’ Legislative Bet on Private Crypto Power, 9 Bus. & Fin. L. Rev. 1, 12 (2025). Assets may later change categorization under the Act to a “commodity” placing them under the less-restrictive jurisdiction of the Commodity Futures Trading Commission (“CFTC”) through changing returns from being calculated on managerial performance to market-based returns. Id. at 16. Critics of this format worry that the “arbitrary definitions” of these categories would allow issuers of digital assets to simply manipulate their categorization to avoid the more stringent SEC regulations. (Mercedes Reed, Better than Clarity, Wyo. L. Rev., 2026, at 404). In a September 2026 letter, a bipartisan group of eighteen state attorneys general echoed this concern, stating their worry that “confusing and conflicting text in multiple sections . . . are vulnerable to exploitation by bad actors” and that the act would rob them of their police power. (Letitia James et al., Multi-State Coalition,). A draft bill by Senator Lummis addressed these concerns by allowing state attorneys general to sue the US Attorney General should any provision harm residents of their state. (Paul Tierno, Congress). The bill, however, has yet to pass and change the regulatory environment for cryptocurrencies.

The Clarity Act’s movement through Congress has been slow and has ultimately stalled in the Senate. (Talia Kaplan, CNBC). After proceeding through the House Committee on Financial Services and the Committee on Agriculture, the bill went before the House of Representatives on July 17, 2025, for a vote. (Lathan & Waktins LLP). The bill passed in a bipartisan roll call vote 294-134, with 216 Republican and 78 Democratic representatives voting in favor of the bill and 132 Democratic representatives voting in opposition. (House Roll Call Vote No. 199, Congress).  Upon moving to the Senate, the bill underwent various revisions addressing ambiguity concerns that were present in the version passed by the House. (Mercedes Reed, Better than Clarity, Wyo. L. Rev., 2026, at 420). Senators hoping to pass the bill met with President Trump in July 2026 to address his concerns, which included questions of how much power to grant state attorneys general in regulating digital assets. (Seung Min Kim, AP). Ultimately, the President agreed to new language allowing state attorneys general to be included in enforcement in a final version of the bill. Id. Despite the changes made, the Senate voted against the bill 49-50 on September 15, 2026, with 44 Democratic senators and 6 Republican senators opposing the bill and 49 Republican senators voting in support. (Senate Roll Call Vote No. 234, Senate). Senator Tillis, who initially opposed the bill, changed his vote from a no to a yes to allow the bill to be reconsidered and leave a path open for the Clarity Act to pass in the future. (Talia Kaplan, CNBC).

Without the statutory regulations provided by the Clarity Act, the CFTC and SEC proposed yet unreleased gap-filling administrative rules; however, it is unclear if these rules will be sufficient to protect consumers. Id. Susan Mersinger, CEO of the Blockchain Association, spoke out in favor of regulation to grow and legitimize the cryptocurrency industry. Id.Brian Armstrong, CEO of Coinbase, has also spoken to the need for the industry to self-regulate. Id. While Congress reconsiders the Clarity Act, lawsuits are being filed against meme coin issuers, including a suit against Hailey Welch, creator of $HAWK, alleging violations of securities law. (Wolf Popper). A similar case has been filed against Kaitlyn Jenner for her $JENNER coin in which Plaintiff Lee Greenfield lost more than $40,000. Azad v. Jenner, No. 2:24-cv-09768-SB-JC, 2026 U.S. Dist. LEXIS 84400, at *1 (C.D. Cal. Apr. 16, 2026). Without the Clarity Act’s framework, Courts must spend resources debating whether to categorize meme coins as securities and therefore apply the protections found in securities law or to consider them as merely collectibles for entertainment with no legal protections. Id. at *6. The definitions provided by the Clarity Act would create more predictability for determining the applicability of securities law and the rights of plaintiffs suing issuers of various digital assets. (Bepi Pezzulli, The Post-Dollar Dollar, Bus. & Fin. L. Rev., 2025, at 33).    

Over 13 million individual meme coins were issued in 2025. (Judy Lagrou, Bloomberg Law). These extremely volatile coins pose great risks of loss for investors and are susceptible to market manipulation. (Michael Adams, Forbes). The Clarity Act of 2025 was introduced to create regulations to protect investors and create order in the cryptocurrency industry. (Lathan & Waktins LLP). Although passing 294-134 in the Hose, the bill ultimately stalled in the Senate. (House Roll Call Vote No. 199, Congress).  Without the bill, the cryptocurrency industry remains unregulated and reliant on the industry to self-regulate. (Talia Kaplan, CNBC). Unless Congress steps in to create regulation, investors will continue to lose money from purchasing meme coins.