CEA Five Freedoms Analysis
Digital Asset Market CLARITY Act
H.R. 3633 · 119th Congress · Sponsored by Rep. French Hill (R-AR)
82
out of 100
CEA Recommendation
Support with Amendments
The CLARITY Act provides needed regulatory certainty for digital assets and limits unilateral Federal Reserve action on a retail CBDC. Congress should strengthen the bill with explicit statutory protections for financial privacy, due process, cash, and individual liberty before final passage.
Bill Summary
What the CLARITY Act Does
The Digital Asset Market CLARITY Act establishes a comprehensive regulatory framework for digital assets in the United States, clarifying the jurisdictional boundary between the SEC and CFTC, providing consumer protections for digital asset holders, and restricting the Federal Reserve from unilaterally issuing a retail Central Bank Digital Currency (CBDC) without additional congressional authorization.
The bill ends years of regulatory uncertainty that has driven blockchain innovation offshore, encourages responsible American leadership in digital finance, and reinforces congressional authority over major monetary policy decisions.
While the legislation does not itself establish a CBDC, it creates much of the legal and regulatory infrastructure on which future digital finance will operate. CEA is particularly attentive to long-term risks if the Act is not strengthened with durable liberty safeguards.
Five Freedoms Analysis
How the CLARITY Act Scores
| Freedom | Score | Analysis |
|---|---|---|
| Economic Freedom | 90 | Establishes a clear regulatory framework for digital assets, encourages innovation, investment, entrepreneurship, and strengthens America's competitiveness in blockchain technology. |
| Operational Freedom | 84 | Replaces regulatory uncertainty with statutory rules enacted by Congress. However, increased compliance obligations and regulatory complexity may disproportionately burden smaller businesses and financial innovators. |
| First Freedom (Religious Liberty) | 82 | Reinforces Congress's constitutional role over major monetary policy decisions by requiring additional congressional authorization before a retail Federal Reserve CBDC could be implemented. However, expanded financial surveillance raises concerns regarding privacy and freedom of association. |
| Workforce Freedom | 80 | Supports growth of blockchain, fintech, and technology employment while reducing legal uncertainty. Future regulatory implementation should avoid discouraging innovation through excessive compliance burdens. |
| Healthcare Freedom | 75 | No direct impact on employer healthcare obligations. |
Biblical Principles
Scripture Foundation
✓ Honest Weights and Measures
"Honest scales and balances belong to the Lord." — Proverbs 16:11
Transparent, congressionally established rules promote fairness over regulation by enforcement. The CLARITY Act restores legislative authority over digital asset markets, checking the tendency of administrative agencies to act beyond their congressional mandate.
Impact Analysis
Positive Findings and Areas of Concern
Positive Findings
- Ends years of regulatory uncertainty surrounding digital assets
- Clarifies SEC and CFTC jurisdiction
- Strengthens consumer protections
- Encourages responsible blockchain innovation
- Supports continued U.S. dollar leadership through regulated private stablecoins
- Reduces the likelihood that the Federal Reserve could establish a retail CBDC without additional congressional approval
Areas of Concern
- Expanded financial surveillance infrastructure
- Mandatory digital identity systems
- Increased dependence on regulated intermediaries
- Market concentration among a handful of financial institutions
- Easier freezing or restriction of assets
- Normalization of programmable financial controls
- Gradual decline of physical cash through market incentives
- Creation of a "Private CBDC" ecosystem
These concerns are not direct statutory effects of the Act but represent plausible downstream risks if appropriate safeguards are not enacted alongside this legislation.
Recommended Amendments
What Congress Must Add
CEA should support the CLARITY Act only if Congress strengthens protections for individual financial liberty. CEA recommends the following eight amendments:
- Amendment 1Permanent Prohibition on a Federal Reserve Retail CBDCStrengthen existing language by prohibiting the Federal Reserve from issuing a retail CBDC unless expressly authorized by a future Act of Congress, or if consistent with congressional intent, prohibit it outright.
- Amendment 2Preserve Physical CashRequire continued legal tender status for cash and ensure Americans retain meaningful access to physical currency in day-to-day commerce.
- Amendment 3Financial Due ProcessRequire judicial review and due process before accounts may be frozen or digital assets restricted, except in narrowly defined emergency circumstances with strict time limits.
- Amendment 4Protect Lawful Self-CustodyAffirm that Americans retain the right to hold and control their own digital assets without mandatory use of regulated custodians.
- Amendment 5Limit Financial SurveillanceAdopt statutory data minimization standards including purpose limitation, retention limits, strict access controls, and meaningful penalties for misuse of financial data.
- Amendment 6Protect Against Programmable Financial RestrictionsProhibit government agencies from requiring programmable restrictions on lawful purchases, geographic limitations, expiration dates, or other forms of behavioral financial control.
- Amendment 7Preserve CompetitionPrevent excessive market concentration by ensuring regulatory requirements remain proportional and do not favor only the largest financial institutions over smaller innovators.
- Amendment 8Protect PrivacyRequire explicit congressional approval before any future expansion of digital identity or transaction monitoring beyond existing AML requirements.
Fiscal and Economic Impact
Economic Effects
Positive Economic Effects
- Greater investment certainty in digital asset markets
- Increased blockchain innovation and domestic competitiveness
- Improved international competitiveness
- Stronger consumer protections
- Continued dollar dominance through private stablecoins
Potential Risks
- Higher compliance costs for smaller firms
- Increased regulatory burden on innovators
- Consolidation among larger financial institutions
- Long-term dependence on regulated digital financial intermediaries
BBI Final Recommendation
Support with Amendments · BBI Score: 82 / 100
The Christian Employers Alliance supports Congress's effort to provide regulatory clarity for digital assets and appreciates provisions that reinforce congressional authority over any future retail Central Bank Digital Currency. However, Congress should not modernize America's financial infrastructure without simultaneously enacting durable safeguards that protect privacy, due process, property rights, competition, and individual financial liberty.
The CLARITY Act should not be viewed simply as cryptocurrency legislation. It establishes much of the legal architecture upon which future digital finance will develop. Congress has a responsibility to ensure that this architecture advances innovation without creating conditions that could eventually enable centralized financial control through government-supervised private institutions.
The CLARITY Act should not be viewed simply as cryptocurrency legislation. It establishes much of the legal architecture upon which future digital finance will develop. Congress has a responsibility to ensure that this architecture advances innovation without creating conditions that could eventually enable centralized financial control through government-supervised private institutions.
Innovation should expand opportunity, not diminish liberty. Congress can modernize America's financial system while preserving constitutional protections by pairing regulatory clarity with strong statutory guardrails for financial freedom.