The CLARITY Act has emerged as a flashpoint in the broader debate over who should control and benefit from revenue generated on public blockchains. As lawmakers and industry stakeholders weigh its implications, the measure has quickly shifted from a niche policy proposal to a central battleground over access to and ownership of onchain funds.
Set against a backdrop of growing government interest in digital assets, the dispute highlights unresolved questions about the role of public institutions in managing blockchain-derived yield. The outcome of this fight will help define how onchain dollars are treated in practice, and how far existing authorities can reach into crypto-native economic activity.
Congress reshapes onchain revenue who actually controls staking and protocol yield
Lawmakers are increasingly scrutinizing how revenue generated directly on blockchains – including staking rewards and protocol-level yield – should be treated, taxed, and ultimately controlled, raising basic questions about who truly benefits from these emerging income streams. Staking, which involves locking up crypto assets to help secure a network in exchange for rewards, has shifted from a niche activity to a core component of many blockchain ecosystems. As this shift accelerates, Congress is weighing how to classify such rewards and whether existing rules designed for customary securities, interest, or dividends can be applied, or if new frameworks are required. This debate extends beyond technical categorization: it touches on the balance of power between individual holders, centralized intermediaries, and the protocols themselves, each of which may play a different role in earning and distributing onchain revenue.
At the same time, protocol yield – revenue generated by the underlying code of decentralized finance platforms or base-layer networks - is testing long-standing assumptions about financial infrastructure and regulatory oversight. Unlike conventional income streams routed through banks or brokerages, onchain revenue can flow directly to user-controlled wallets or be intermediated by exchanges and staking providers, making it less obvious where regulatory duty begins and ends.Congressional efforts to redefine or clarify the treatment of these flows could influence everything from how staking services operate to how easily retail investors can participate. However, any new approach will also face practical limits, including the global, open-source nature of blockchain networks and the difficulty of imposing jurisdictional rules on decentralized systems, leaving a complex policy landscape that is still very much in flux.
Legal gray zones in tokenized treasuries how the CLARITY Act could redraw investor rights
legal uncertainty has become a defining feature of tokenized treasury products, as regulators have yet to clearly delineate how existing securities, commodities, and banking laws apply when traditional assets are represented on public blockchains. In practice, this means issuers, trading venues, and investors must navigate overlapping rules on disclosure, custody, and investor protection without a settled framework for on-chain instruments that reference U.S. government debt or similar assets. The CLARITY Act is being watched closely because it aims to draw sharper lines around who is responsible for what in these structures, and under which jurisdictional lens these tokens should be viewed. By doing so, it could bring greater legal definition to issues such as whether a tokenized treasury is treated more like a security, a payment instrument, or a novel form of digital commodity, and what that implies for compliance obligations.
For investors, the most immediate stakes lie in how the Act might influence ownership rights, redemption procedures, and recourse in the event of insolvency or fraud. Today, questions remain about whose rights prevail if there is a conflict between what is recorded on-chain and what is recorded in traditional books and records, or how claims are prioritized if an issuer or intermediary fails. the CLARITY Act does not resolve these debates on its own, but it is positioned to redefine the legal hierarchy between token holders, issuers, and custodians by specifying which entities are accountable for safeguarding assets and honoring redemptions. Market participants expect that any new statutory guidance will both expand opportunities for compliant tokenized treasury products and expose the limits of what these instruments can promise investors, particularly around liquidity, openness, and protections that have long existed in conventional bond and money-market markets but are not yet consistently replicated on-chain.
From validators to venture funds who stands to win or lose in the fight over onchain dollars
As competition intensifies around who will control and monetize onchain dollars, the balance of power across the crypto ecosystem is being tested.Validators and base-layer infrastructure providers stand to benefit when more dollar-denominated activity settles directly on their networks, since higher usage can translate into increased fees and greater demand for blockspace. At the same time,large stablecoin issuers,payment processors,and custody platforms are positioning themselves as key gateways for these flows,seeking to capture the margins that come with facilitating onchain transactions,liquidity,and compliance services. This emerging structure is less about a single winner and more about how revenue and influence get distributed along the stack, from the protocol level to the applications that everyday users see.
On the other side of this realignment are venture funds and early-stage projects that must now navigate an habitat where core infrastructure and onchain dollar rails might potentially be increasingly consolidated among a few dominant players. For some, this concentration can narrow the room for experimentation, as new entrants depend on established issuers, networks, or intermediaries to access liquidity and users. For others, it creates opportunities to build specialized tooling, analytics, and compliance-native products that sit on top of these rails, rather than competing with them directly. The outcome will likely hinge less on any single technology choice and more on how governance, interoperability, and regulatory pressure shape the incentives of those controlling the platforms through which onchain dollars move.
Policy roadmap for crypto markets practical steps regulators and builders can take now
Against this backdrop, the emerging policy agenda for digital assets is shifting from high-level principles toward more concrete, implementable measures. Regulators are increasingly focused on clarifying how existing rules apply to activities such as trading on centralized exchanges, custody of client funds, and the issuance of new tokens, rather than creating entirely separate regimes for crypto. This includes efforts to tighten basic safeguards around disclosure, market integrity, and conflict-of-interest management, with the aim of making crypto markets more resilient without determining which technologies or business models should prevail. For market participants, these moves signal that compliance expectations are hardening, even where final rulebooks are still in development.
For builders and infrastructure providers, the current environment is prompting a more deliberate alignment with regulatory priorities. Projects are placing greater emphasis on obvious token structures, clearer governance processes, and risk controls designed to withstand scrutiny from both supervisors and institutional partners. At a practical level, this means engaging earlier with legal and compliance experts, documenting how protocols handle issues such as custody, data security, and market abuse, and preparing to adapt as new guidance is released. while these steps will not eliminate uncertainty, they position developers and service providers to participate in a maturing market where regulatory clarity and operational robustness are becoming prerequisites for broader adoption.
Whether the CLARITY Act ultimately unlocks a new era of compliant, onchain finance or constrains it under the weight of federal oversight will hinge on how lawmakers resolve the central question now confronting the industry: who gets the yield.
For protocol builders and liquidity providers, the answer will determine how - and even whether – certain DeFi business models can survive. For regulators and policymakers, it will test how far existing investor-protection principles can stretch into a world of composable smart contracts and tokenized dollars. And for users, it will shape what “safe yield” looks like in an environment where code, not banks, increasingly intermediates risk.
As Crypto Week puts these tensions on display, the CLARITY debate is evolving into a proxy battle over the ownership, control and distribution of onchain returns. The next drafts, amendments and enforcement signals will show whether Washington is prepared to recognize yield generated on public blockchains as a durable part of the financial system - or treat it as a risk to be contained.For now, the legislation has surfaced a fault line that will define the next phase of crypto policy: in a tokenized dollar economy, the fight is no longer just over how much yield the system can generate, but over who, in the eyes of the law, is entitled to claim it.
