Citi Reports CLARITY Act Progress for Crypto Regulation, But DeFi Debate Poses Risk

Analysts at Citi highlight growing momentum behind the CLARITY Act, a pivotal cryptocurrency regulation bill aimed at providing clearer guidelines for stablecoins and crypto markets. The legislation is seen as a crucial step towards establishing a comprehensive U.S. regulatory framework for digital assets like Bitcoin (BTC) and Ethereum (ETH). However, Citi cautions that contentious debates over how to regulate decentralized finance (DeFi) protocols could significantly delay or stall the bill's passage. The clash centers on applying traditional financial rules to decentralized systems. This regulatory uncertainty remains a key hurdle for the broader crypto industry, despite the positive legislative developments.