What the Proposed CLARITY Act Could Mean for Token Compensation (2026)

The CLARITY Act would redraw how United States law classifies digital assets. If it passes, the biggest change for companies that pay people in tokens is not tax. It is whether your token is treated as a security. Here is what the bill could change for token compensation, and what it would not.

As of June 2026, the CLARITY Act is proposed legislation, not law. It passed the House in July 2025 and cleared the Senate Banking Committee in May 2026, but it has not passed the full Senate or been signed. Treat everything below as conditional, and confirm the current status before you act on it.

TL;DR

• The CLARITY Act (H.R. 3633) is a US market-structure bill that would divide oversight of digital assets between the SEC and the CFTC and define when a token is a security versus a digital commodity.
• It is not law. It passed the House in July 2025 by 294 to 134, cleared the Senate Banking Committee in May 2026 by 15 to 9, and now sits on the Senate calendar awaiting a floor vote.
• For token compensation, the key effect would be indirect. If a token is classified as a digital commodity rather than a security, the securities-law friction on issuing and transferring it to employees could ease.
• What would not change: token grants are still taxed as ordinary income, the 83(b) election still matters, and per-jurisdiction withholding still applies. CLARITY is market-structure law rather than tax law.
• The right move now is to prepare and document rather than act on a bill that has not passed.

The CLARITY Act could make it easier to grant tokens to employees by classifying many tokens as digital commodities rather than securities, which would reduce the securities-law restrictions on issuing and transferring them. It would not change how token compensation is taxed. Token grants would still be ordinary income, and the 83(b) election and local withholding would still apply.

What is the CLARITY Act, and what is it not?

The CLARITY Act, formally the Digital Asset Market Clarity Act of 2025 (H.R. 3633), is a market-structure bill. Its lead sponsor is Representative French Hill, and it advanced through both the House Financial Services and House Agriculture committees, which reflects its core design: deciding which regulator oversees which digital asset.

It is a framework for markets, not a tax code. The bill sets out when a digital asset is a security under the SEC, when it is a commodity under the CFTC, and what disclosures an issuer owes. It does not rewrite how compensation is taxed, and it does not create a new payroll regime. That distinction is the whole reason the token-compensation impact is indirect rather than direct.

And it is not yet law. It passed the House in July 2025 with a bipartisan 294 to 134 vote, and the Senate Banking Committee advanced it in May 2026 by 15 to 9. From there it still needs a full Senate vote, likely reconciliation with the Senate's own drafts, and a presidential signature. The Senate is working parallel proposals, so the final text could shift. Anyone planning around CLARITY should plan around a moving target.

How the bill splits the SEC and CFTC, and reclassifies tokens

The bill sorts digital assets into three buckets.

A digital commodity is an asset whose value comes from the use of a blockchain, and it falls under the CFTC for spot-market oversight. An investment contract asset is a digital asset sold to raise capital under an investment contract, and its issuance falls under the SEC. A permitted payment stablecoin is a fiat-backed, redeemable token handled separately.

The important detail for compensation is that investment contract asset status is temporary. Under the bill, once the asset trades in secondary markets through someone other than the issuer, it can become a digital commodity and leave securities treatment behind. In other words, a token can start its life under the SEC and graduate into commodity status. That transition is exactly the moment a lot of compensation friction would ease.

The mature blockchain test, and why it matters for tokens used as compensation

The bill ties much of this to whether a blockchain is mature. An issuer can certify a system as mature when it runs on open-source code and transparent rules, executes and validates transactions without a central operator, and is not controlled by any single person or group, including anyone holding 20 percent or more of the tokens or voting power. The SEC would publish a guide for measuring this.

This matters for token compensation because classification, and therefore your ability to grant a token and let employees sell it, can hinge on the maturity test. A token tied to a centralized, early-stage project is more likely to stay in security territory, with the restrictions that brings. A token on a system that meets the decentralization bar is more likely to be treated as a commodity, which loosens the constraints on granting it and on grantees reselling it. The test rewards genuine decentralization, and it penalizes concentration.

What the CLARITY Act could change for token compensation

Today the core problem is that tokens likely qualify as securities. That classification limits the use of Rule 701, the standard exemption companies rely on to issue equity compensation, and pushes token grants into accredited-investor or private-placement structures. It also restricts what a grantee can do with the token afterward. The result is friction on issuing grants and limits on selling them.

If the CLARITY Act passes and a token is treated as a digital commodity, or graduates out of investment contract status once a mature blockchain is certified and secondary trading begins, the securities-law overhang on issuing and transferring that token to employees could ease. Grants could become simpler to make, and grantees could face fewer transfer restrictions in secondary markets. That is the central, conditional thesis: CLARITY would not write new compensation rules, but by changing what a token is, it would change how freely a token can be used as compensation.

Treat that as a possibility rather than a promise. The bill's exemptions are oriented toward capital raising, and no provision is written specifically for compensation. The effect on grants is a downstream consequence of reclassification, and the final Senate text could move the thresholds or the line between the two regulators. This is a reason to prepare rather than a reason to restructure a comp plan around a bill that has not passed.

What would not change

This is the part worth stating plainly, because it is where the optimism usually overreaches. The CLARITY Act would not change how token compensation is taxed.

Token grants are taxed as ordinary income. For restricted tokens, that is the fair market value at vesting, or at grant if the recipient files a timely 83(b) election within 30 days, with capital gains treatment on later appreciation if held long enough. Restricted token units are ordinary income at delivery. Token options follow the usual option and 409A rules. Per-jurisdiction income tax and withholding obligations still apply, country by country. None of this sits inside a market-structure bill, so none of it moves if CLARITY passes. A company that reads CLARITY as tax relief has misread it.

For the mechanics of the tax side, see the employer's guide to token compensation and 83(b) elections and token grants.

What should token-issuing companies do now?

The honest answer is to prepare rather than act. You cannot build a compensation program on a bill that has not passed, and you should not pause one you need today because a bill might pass later.

The useful work is the work you owe regardless. Keep clean records of every token grant, vesting schedule, and 83(b) election. Withhold and report correctly in each jurisdiction where you have recipients. Keep audit-ready documentation that ties each grant to its tax treatment. Companies that already run token compensation this way will be able to move quickly if CLARITY reclassifies their token, and they will be compliant whether it passes or not. That administration layer, vesting, per-jurisdiction withholding, and audit-ready token-grant reporting, is what Toku's token grant administration is built to handle, and it is the same discipline that protects you today. See token compensation regulations and types of token compensation for the groundwork.

CLARITY Act vs GENIUS Act: what is the difference?

The two are often mentioned together and do different things. The GENIUS Act, signed in 2025, governs payment stablecoins, the dollar-backed tokens used to move money. The CLARITY Act, still proposed, governs market structure, deciding when a broader digital asset is a security or a commodity.

For compensation, the split is clean. GENIUS affects paying people in stablecoins, which is a payment-rail question. CLARITY affects paying people in tokens that carry investment characteristics, which is a securities question. A company paying salaries in USDC is mainly in GENIUS territory. A company granting its own token to employees is mainly in CLARITY territory. For the stablecoin side, see the GENIUS Act and stablecoin regulation. For how this same bill affects paying wages in stablecoins, see what the CLARITY Act means for stablecoin payroll.

Frequently Asked Questions

Has the CLARITY Act passed, and is it law yet?

No. As of June 2026, the CLARITY Act (H.R. 3633) has passed the House, by 294 to 134 in July 2025, and cleared the Senate Banking Committee, by 15 to 9 in May 2026. It has not passed the full Senate or been signed into law. It still needs a Senate floor vote, likely reconciliation with Senate drafts, and a presidential signature, so its provisions could still change.

Does the CLARITY Act change how token compensation is taxed?

No. The CLARITY Act is a market-structure bill rather than a tax law. Token grants would still be taxed as ordinary income, the 83(b) election would still apply, and per-jurisdiction withholding would still be required. What the bill could change is the securities classification of a token, which is a separate question from how the grant is taxed.

Would the CLARITY Act remove securities restrictions on employee token grants?

Potentially, but indirectly. If a token is classified as a digital commodity rather than a security, the securities-law friction on issuing and transferring it to employees could ease, including restrictions that currently limit the use of Rule 701. The bill contains no provision written specifically for compensation, so any benefit to grants would be a downstream effect of reclassification rather than a direct rule.

What is the difference between a digital commodity and an investment contract asset?

Under the bill, a digital commodity derives its value from a blockchain and falls under the CFTC, while an investment contract asset is sold to raise capital under an investment contract and falls under the SEC. The key detail is that investment contract asset status is temporary. Once the asset trades in secondary markets through someone other than the issuer, it can become a digital commodity and leave securities treatment.

How is the CLARITY Act different from the GENIUS Act?

The GENIUS Act, signed in 2025, regulates payment stablecoins, the dollar-backed tokens used to move money. The CLARITY Act, still proposed, regulates market structure and when a digital asset is a security or a commodity. For compensation, GENIUS is relevant to paying people in stablecoins, while CLARITY is relevant to granting people tokens.

What should token-issuing companies do before it passes?

Prepare without acting on unpassed law. Keep clean records of grants, vesting, and 83(b) elections, withhold and report correctly in each jurisdiction, and maintain audit-ready documentation. This keeps you compliant today and ready to move quickly if the bill reclassifies your token. Restructuring a compensation plan around legislation that has not passed is premature.

Where this leaves token-issuing companies

The CLARITY Act is worth watching closely and acting on carefully. If it passes, it could make tokens meaningfully easier to use as compensation by changing what they are in the eyes of the law. It would not change the tax treatment, the 83(b) clock, or the withholding you owe across jurisdictions. The companies in the best position are the ones whose token grant administration is already clean, because they can adapt to a new classification without scrambling. To get that foundation in place, book a demo with Toku.

Disclaimer

The CLARITY Act is proposed legislation and may change before enactment, if it is enacted at all. This content is for informational purposes only, reflects the status of the bill as of June 2026, and does not constitute legal or tax advice. Toku provides compliance infrastructure and is not a law firm. Consult your legal counsel for guidance specific to your situation and jurisdiction.