What the CLARITY Act could mean for digital asset market participants

The Senate’s July 22 discussion draft of the Digital Asset Market Clarity Act combines the Banking Committee’s securities provisions with the Agriculture Committee’s digital commodity intermediary provisions into a proposed federal framework that would allocate responsibilities between the SEC and CFTC and create new registration categories.¹ The legislation is not final, and its provisions could change through the legislative process or subsequent rulemaking. 

The draft nevertheless reflects a policy direction toward applying transparency, controls and customer protections associated with institutional financial markets to digital asset activity. 

Although the details continue to evolve, recurring themes in recent drafts include:

• Transparent, auditable execution
• Market integrity and asset governance
• Custody and customer-asset controls
• Regulatory reporting and operational resilience

For market participants, the question is increasingly how firms would operationalize the additional requirements contemplated by a comprehensive federal market-structure framework. Talos was built to support this convergence.

Transparent, auditable execution

Section 20206 requires digital commodity brokers and dealers to meet Commission rules on "fair and objective pricing," disclosure of transaction information, and protection of the price discovery process. The same section requires:

• Daily trading records and counterparty-identified transaction records
• A complete audit trail sufficient for trade reconstruction
• Retention of related communications, including email, instant messages and recordings of telephone calls

Exchanges face a parallel obligation under Section 20204 to establish trading procedures and monitor for abusive practices.

How can Talos help? Talos can aggregate pricing across exchanges and OTC counterparties and provide configurable execution algorithms and post-trade transaction cost analysis. Client configurable order, quote, execution and allocation data capture across the trade lifecycle to assemble and evidence portions of the pricing, execution and order-lifecycle record contemplated by the draft.

Market integrity and asset governance

Section 20204 would set a listing standard: a digital commodity exchange may permit trading only in an asset "not readily susceptible to manipulation," supported by public disclosure of the asset's technology, transaction history, supply schedule and governance mechanism. Section 20203 would create a certification process for listing a digital commodity:

• An initial 20-business-day review period for a first-time listing, which the Commission may extend twice by up to 30 business days each
• An expedited one-business-day process for an asset already certified elsewhere, subject to the statutory conditions

Section 20208 would create digital commodity pool operator and digital commodity trading advisor categories for certain persons operating or advising pools that trade digital commodities, subject to statutory exclusions and potential Commission exemptions. 

How can Talos help? Normalized market and reference data across fragmented venues, liquidity and execution-quality analytics, and configurable instrument and counterparty permissioning can provide key inputs to a firm’s asset-eligibility and market-integrity review. For fund managers newly in scope for registration, position, exposure and trading-activity reporting drawn from execution and portfolio records reduces the incremental build that would be required to meet recordkeeping obligations tied to that registration.

Risk, custody and customer-asset controls

Section 20205 defines a qualified digital asset custodian and would require:

• Supervision by a banking regulator, the CFTC, the SEC, or a comparable state or foreign authority
• Capital sufficient for an orderly wind-down
• Customer asset protection and a business continuity plan

Section 20206 would set capital requirements for brokers and dealers. Title VII, in Sections 10701 and 10702, amends the Bankruptcy Code to treat digital commodities and ancillary assets held for customers as customer property distributable under Title 11, and would create a safe harbor treating digital commodity transactions as commodity contracts for purposes of the Code's safe-harbor and netting provisions.

How can Talos help? Talos can provide consolidated views of positions, balances, exposures and profit and loss; visibility into credit utilization and unsettled obligations; connectivity to custodians, exchanges, dealers and settlement networks; and reconciliation across trading, custody and settlement records. These capabilities can help support monitoring, reconciliation, exposure management and evidence of operational controls. The Talos technology platform provides an orchestration and connectivity layer, while clients determine their trading strategies and order parameters and manage their counterparty relationships.

Regulatory reporting and operational resilience

Section 20215 would require exchanges, brokers and dealers to file periodic reports on customer positions above a Commission-set threshold and to maintain records of those positions, with rulemaking directed toward standardized data fields, reporting formats and automated submission methods. Section 20205 separately would require custodians to maintain a business continuity plan and complaint-resolution procedures.

How can Talos help? Unified, exportable records across the trade lifecycle; standardized APIs and reporting feeds; historical market, transaction and portfolio data; and automated reconciliation with exception identification can support a firm’s preparation for the standardized and increasingly automated reporting framework contemplated by the draft.

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¹ This article refers to the Senate discussion draft dated July 22, 2026, an amendment in the nature of a substitute to H.R. 3633. The legislative text and its procedural status may change. Section references in this article are to the July 22 discussion draft

^{Talos Trading, LLC (“Talos”) offer software-as-a-service products that provide connectivity tools for institutional clients. Talos does not provide clients with any pre-negotiated arrangements with liquidity providers or other parties. Clients are required to independently negotiate arrangements with liquidity providers and other parties bilaterally. Talos is not party to any of these arrangements. Services and venues may not be available in all jurisdictions. For information about which services are available in your jurisdiction, please reach out to your sales representative. This document and information do not constitute an offer to buy or sell, or a promotion or recommendation of, any digital asset, security, derivative, commodity, financial instrument or product or trading strategy. This document and information are not intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. This document and its information are subject to change without notice. It is provided only for general informational, illustrative, and/or marketing purposes, or in connection with exploratory conversations with institutional investors and is not intended for retail clients. The information provided was obtained from sources believed to be reliable at the time of preparation, however Talos makes no representation as to its accuracy, suitability, non-infringement of third-party rights, or otherwise. Talos disclaims all liability, expenses, or costs arising from or connected with the information provided.}