Even after lawmakers approved a regulatory framework for stablecoins, their interest in laws overseeing cryptocurrencies has not ebbed. 

Months after the signing of the Genius Act in July, which set ground rules for issuance and use of stablecoins, lawmakers are considering the Clarity Act, which sets market structure for digital assets. 

The Guiding and Establishing National Innovation for U.S. Stablecoins (Genius) Act “makes stablecoins an approved payment mechanism in the U.S.," said Roy Ben-Hur, digital assets financial services leader for Deloitte.

However, the Digital Asset Market Clarity Act — or simply just Clarity Act — “draws some lines on when a token is treated like a security and when it becomes a digital commodity," said Deborah Kovsky-Apap, a partner at the law firm Troutman Pepper Locke.  "The law is more focused on a division of jurisdiction between the [Securities and Exchange Commission] and the [Commodity Futures Trading Commission].”

Stablecoins are cryptocurrencies tied to the value of a fiat currency, such as the dollar, which theoretically makes them more stable in value compared to volatile digital assets such as Bitcoin.

The Clarity Act was approved by the U.S House of Representatives in July and is currently being debated by two U.S. Senate committees. 

The House and Senate versions of the bill are different, Ben-Hur stressed, but both require anyone trading digital currencies to follow the same disclosure and registration requirements as those trading other assets and commodities. 

“If it falls under SEC, that it will be classified as investment contract asset and subject to all SEC jurisdictions," he said.

While the Genius Act is specific to stablecoins, the Clarity Act deals with all manner of digital assets and tokens, including cryptocurrencies like Bitcoin and stablecoins, Ben-Hur said.

How will regulators decide which digital currencies are to be regulated by the Commodity Futures Trading Commission and which are assets that will be regulated by the Securities and Exchange Commission?

“It’s complicated," said Alejandro Latorre, a principal for the consulting and accounting firm Ernst and Young's risk management advisory practice.

In short, a series of tests will determine which bucket a digital asset falls into, he said.

Those tests can be head-spinningly complex, but put simply, if a digital currency is specifically tied to the value of a company, it's an asset under the purview of the SEC, Kovsky-Apap said.

But cryptocurrencies and other digital tokens that are openly traded in marketplaces and are not tied to a specific company are more likely to be classified as commodities, she said.

And a specific cryptocurrency or stablecoin won't necessarily remain under the same category throughout its lifetime, Kovsky-Apap stressed.

A digital asset tied to the value of a specific company can become a commodity if it becomes available in a marketplace accessible to the general public, she said.

With the Clarity Act, lawmakers are trying to find a regulatory "Goldilocks zone," said Patrick Witt, who is the executive director of the President's Council of Advisors for Digital Assets.

Regulations should be stringent enough “to allow market participants to have the clarity that they need to participate in the space, but not so much that it becomes overly burdensome," he said in a March 2 panel at the Economic Club of New York.

However, it's not clear if the Clarity Act will become law.

The legislation is caught in a battle between cryptocurrency advocates and banks who disagree over whether digital currencies should yield a return similar to assets such as treasury bonds.

The Genius Act specifically bars yields on stablecoins, but the law included loopholes that could allow stablecoin yields that the House version of the Clarity Act seeks to close, Kovsky-Apap said. Banks want that language included in the final version, while crypto supporters want it removed.

In a social media post, President Donald Trump gave the two sides until March 1 to come to an agreement, but that deadline came and went with no compromise, putting the bill’s passage in doubt.