Mutual Credit Currencies and the CLARITY Act: What the Framework Actually Says

There's a growing assumption that the CLARITY Act — the US digital asset market structure bill that passed the House last year and is now working its way through the Senate — only benefits blockchain-native tokens and leaves everything else in the cold.

We've been reading the legislation carefully, and here's what we found.

The Act Is Technology-Neutral by Design

The CLARITY Act defines "blockchain" as a cryptographically secured distributed ledger — and then adds the words "or any similar technology." The drafters clearly understood that the digital asset landscape extends beyond blockchains, and wrote the Act accordingly.

The joint SEC/CFTC interpretation issued on March 17, 2026 reinforces this point. It classifies assets into five categories — digital commodities, digital collectibles, digital tools, stablecoins, and digital securities — based on their characteristics, uses, and functions. Not based on whether they run on a blockchain.

The relevant question under the framework is not "is it a blockchain?" It's "what does the asset do, and how does it derive value?"

What the Taxonomy Looks For

The SEC/CFTC taxonomy defines a "digital commodity" as an asset whose value is intrinsically linked to the programmatic operation of a functioning crypto (not blockchain) system.

This is an important distinction. The framework evaluates whether a system works, whether it's decentralised, and whether its value derives from use rather than from the managerial efforts of others. It doesn't prescribe which consensus mechanism or data structure you use.

Agent-centric architectures, distributed hash tables, and mutual credit ledgers are not excluded by the text. They're evaluated by the same functional criteria as everything else.

Mutual Credit and the Howey Test

Mutual credit currencies have a specific and significant property under the Howey test — the legal standard that determines whether something is a security.

The Howey test asks whether there is an investment of money in a common enterprise with an expectation of profits derived from the efforts of others.

A mutual credit currency, which is a value-stable medium of exchange — what a real currency in a real economy is designed to be — holds purchasing power rather than appreciating speculatively. That’s the property that takes it outside the Howey test's 'expectation of profits' requirement.

The SEC's own taxonomy created a category for this: digital tools — non-security crypto assets whose value derives from functional utility. A mutual credit settlement currency fits this description more naturally than almost anything else in the digital asset space.

The Fiat Access Question

There's a common claim that non-blockchain currencies can't access fiat rails under the CLARITY Act and are therefore worthless.

This misunderstands both the Act and how multi-currency economies work.

The Act doesn't prohibit fiat conversion for non-blockchain assets. It creates registration and oversight frameworks for intermediaries handling digital commodities. Assets that fall outside the Act's definitions aren't illegal. They're simply not regulated under this specific framework.

Mutual credit has been operating alongside fiat systems for almost a century. WIR Bank in Switzerland has run a complementary currency since 1934 — used by over 60,000 businesses — without needing a crypto exchange listing or a blockchain. The currency is used for real economic activity between real businesses, and it coexists with the Swiss franc without either one making the other redundant.

The question has never been "does every currency need its own fiat pair?" The question is whether the architecture creates genuine economic utility. Currencies that do real work in real economies have always found paths to interoperability with fiat systems. The CLARITY Act doesn't change that. If anything, it clarifies the landscape for projects building genuine utility rather than speculative instruments.

The Funding Question

There's a related claim that projects using mutual credit currencies can't fund themselves because they can't sell their MCC for fiat. This confuses the currency with the project.

A mutual credit currency is a medium of exchange — the thing people transact in. It is not a fundraising instrument. Projects don't fund themselves by selling the currency their users use any more than a business funds itself by selling the dollars in its cash register. The currency and the capital structure are separate things.

Projects fund themselves the way projects have always funded themselves: through investment, grants, revenue from services, or — in the crypto context — through the sale of a separate token designed for that purpose. The CLARITY Act explicitly creates a pathway for this. It provides an exemption allowing projects to raise up to $75 million annually through token sales under SEC disclosure requirements, with a clear route from securities-like status to commodity classification as the network matures and decentralises.

The conflation of "medium of exchange" with "fundraising mechanism" is itself the problem that most of the crypto industry created. Projects issued tokens as their funding instrument and their utility currency, then discovered that the speculative dynamics required to attract capital actively undermined the stability required for the currency to be useful. A project that separates its capital structure from its transactional currency avoids that trap entirely. The CLARITY Act accommodates both functions — it just doesn't require them to be the same token.

Who the Act Actually Challenges

The CLARITY Act's entire structure rewards functional systems over speculative ones.

The decentralisation requirements, the maturity certification process, and the commodity classification criteria, all favour assets with demonstrable utility in systems that actually work. The "digital commodity" classification requires that value be "intrinsically linked" to the use of a functional system, not to speculation about future price. The DeFi exemptions protect non-custodial infrastructure, software developers, and protocol builders.

Projects that built speculation machines have a problem under this framework. Projects that built economic infrastructure — systems where people transact for real goods and services, where currency supply tracks real activity, where value derives from use rather than hype — are exactly what the Act is designed to accommodate.

The assumption that regulatory clarity is bad for non-blockchain projects gets the situation exactly backwards. Regulatory clarity is bad for projects with nothing underneath the token. 

The CLARITY Act is good for projects that are building something real.

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This post reflects our reading of currently proposed legislation and regulatory guidance as of April 2026. The CLARITY Act has passed the US House of Representatives but has not yet been enacted into law. Its provisions may change during the Senate process. This is not legal or financial advice.