As the CEO of StartEngine, I've spent years championing the democratization of capital through crowdfunding. From equity raises for startups to opening doors for everyday investors, we've seen how regulatory clarity can unleash innovation.

In the past, I led multiple conferences in Santa Monica titled ICO 2.0 to promote the idea that ICOs are a new form of capital raising. We had thousands of attendees and many entrepreneurs.¹ Unfortunately, the regulation was not there to legally conduct ICOs in the United States.  

Today, I'm excited to dive into a game-changing piece of legislation that's poised to do the same for the blockchain world: the CLARITY Act of 2025. If you're involved in crypto, tokens, or building decentralized protocols, this is your roadmap to raising capital without the regulatory fog that's stifled so many projects.

Let's break it down simply, why understanding the CLARITY ACT matters, and how it could spark a new wave of token-based fundraising — much like the ICO boom of yesteryear, but with clear regulations.

What Is the CLARITY Act?

First, what exactly is the CLARITY Act? It's a bipartisan bill passed in Congress and now in the Senate to provide much-needed definitions and exemptions for digital assets.² At its core, it's a lifeline for blockchain protocols that issue tokens, allowing them to operate under clear rules rather than the patchwork of interpretations that have led to lawsuits and uncertainty.³

The act solves the problem entrepreneurs faced: How to raise capital by selling tokens before they are ready to be used without violating securities laws and then allow the investors to trade those tokens as digital commodities on any crypto exchanges such as Binance, Kraken and Coinbase.⁴

What Makes the CLARITY ACT Important?

For years, the crypto space has been hampered by regulatory ambiguity. Remember the Wild West of 2017-2018, when Initial Coin Offerings (ICOs) exploded?⁵ Projects raised billions by selling tokens to fund development, but many ran afoul of securities laws, leading to SEC crackdowns hurting entrepreneurs who could have been stirred the wrong way by attorneys and consultants.⁶

Ethereum's ICO in 2014, for instance, raised about $18 million by selling ETH tokens, fueling the smart contract revolution that powers DeFi and NFTs today. But post-ICO, the fear of being labeled a security has forced many protocols underground or overseas.⁷

The CLARITY Act changes that by carving out exemptions, letting U.S.-based projects raise capital domestically while protecting investors.³

It's about balancing innovation with accountability — something we've mastered in equity crowdfunding at StartEngine. After over 1,000 campaigns, $1.4 billion raised, and a community of 2.1 million investors, we are welcoming the CLARITY act with enthusiasm.⁸

Empowering Fundraising

The real magic lies in how the Act empowers fundraising. For "digital commodity issuers" — think blockchain protocols launching utility tokens — the bill creates a safe harbor to raise up to $75 million annually without full SEC registration. This applies to mature blockchain systems, where tokens are decentralized and not controlled by a single entity. Think Ethereum, Avalanche, Solana and many more.⁹

Instead of navigating complex securities filings, issuers file disclosures about their project, team, and tokenomics, then sell tokens directly to the public.¹⁰ This is similar to the White Papers of yesterdays with more structure. Over four years, that's potentially $300 million in phased raises, but the annual cap keeps things measured.  

This mirrors Regulation A+ in traditional crowdfunding, which we've used at StartEngine to help companies raise up to $75 million from non-accredited investors. Now, imagine applying that to tokens: no more hiding behind SAFTs (Simple Agreements for Future Tokens) or offshore entities. The new model issues tokens to investors that at some point become digital commodities. This provides investors potential liquidity should the protocol launch and list on more than one exchange.¹⁰

Genuine Capital for Real Innovation

Let's focus on blockchain protocols that issue tokens, as this is where the Act shines. These aren't just cryptocurrencies; they're the building blocks of decentralized apps. Tokens incentivize users, govern networks, and reward contributors.

Under the CLARITY Act, protocols can conduct ICO-like offerings legally, provided they meet disclosure requirements and limit sales to $75 million per year. The project can use any regulated platform offered by broker-dealers who can prepare the filings and certify the transformation into a digital commodity. This revives the ICO model but with transparency and investor protection, just genuine capital for real innovation.⁹

Take Ethereum as a historical example. In 2014, Vitalik Buterin's team sold ETH tokens in an ICO, raising funds to build a programmable blockchain. Without clear rules, it operated in a gray area, but it worked — Ethereum now underpins a multi-trillion-dollar ecosystem.⁷

Fast-forward to today: A new protocol like a decentralized oracle network (think Chainlink's early days) could use the CLARITY Act to issue tokens for data providers. They disclose their whitepaper, roadmap, and token distribution, then raise $75 million in the first year to bootstrap nodes and integrations. Investors get tokens that accrue value as the network grows, all without the SEC deeming it an unregistered security.

Another example: Consider a layer-2 scaling solution for Ethereum, similar to Polygon's 2019 ICO (which raised $5.5 million). Under current ambiguity, they'd face enforcement risks.¹¹ With CLARITY, they could target $75 million, allocating tokens to developers, stakers, and users. Disclosures ensure everyone knows the risks — token value tied to adoption, not guaranteed returns.

Or imagine a DAO-focused protocol like Aragon, which raised $25 million in 2017. Today, a successor could raise in phases: $20 million for core development, then more as the network matures into a "digital commodity."

10,000 Alt Coins and Counting

For DAOs and community-driven projects, this is revolutionary. Tokens become tools for governance and funding, not liabilities. A Web3 social network could issue tokens to creators, raising capital to compete with centralized platforms.

Guardrails like min-retweet or engagement filters? Not needed here — the Act mandates audits and anti-fraud measures. It's not a free-for-all; issuers must prove decentralization over time, transitioning from "digital asset" (security-like) to "digital commodity" (commodity-regulated by CFTC).⁹

There are close to 10,000 Alt coins or tokens listed today.¹² With the passage of the CLARITY ACT, we could see 20,000 listings.

The creativity of crypto entrepreneurs is without limit. The community of decentralized programmers is vast and because it is now a U.S. regulation, we could see a large influx of talent creating U.S.-based corporations to manage the development and maintenance of the protocols. No need for a Swiss or off shore foundation to raise the capital and issue the tokens. It can be done directly in the United States under a corporation.

The CLARITY ACT: A Catalyst for Equitable Crypto

At StartEngine, we've seen how Reg CF and Reg A+ empowered thousands of startups. Now, tokens have their turn. This could spark a "new golden age" of tokens, where protocols fund breakthroughs in DeFi, NFTs, and beyond.

Of course, the bill isn't law yet — it's navigating the Senate amid broader crypto debates.² But its bipartisan support signals progress. If you're building a protocol, start preparing disclosures now. Investors, watch for compliant offerings — they could be the next Ethereum.

In closing, the CLARITY Act isn't just legislation; it's a catalyst for equitable capital access in blockchain. As someone who's built a career on this, I'm optimistic. Let's embrace this clarity and build the future.

Best regards,  

Howard Marks  
CEO, StartEngine  

Important Disclosures

This article may contain forward‑looking statements and projections. These are not guarantees; actual outcomes may differ materially.

Investing in private, pre‑IPO companies is highly speculative and illiquid. Such investments are intended only for accredited investors who can bear the risk of total loss. Past performance does not guarantee future results. Consult a financial advisor before investing.

Securities offered through StartEngine Primary, LLC, member FINRA/SIPC. This is a general investment recommendation for accredited investors under Regulation Best Interest; it is not personalized investment advice. Review our Form CRS and Reg BI disclosure to understand our services and conflicts.

Sources

1. Sources: Amy Wan, “First Regulated Initial Coin Offering Conference ICO 2.0 Summit Dives Deep into ICO Legal, Regulatory & Economic Implications,” Crowdfund Insider, November 13, 2017; Angela Scott-Briggs, “Interview with Howard Marks, the CEO of Startengine; ICO 2.O for Safe and Secure Investments,” TechBulletin, July 19, 2018

2. Source: Chairman French Hill, “Financial Services Highlights Support for CLARITY Act,” U.S. House Committee on Financial Services, July 18, 2025

3. Source: Miles Jennings & Aiden Slavin, “The CLARITY Act — Why It Matters, What to Know, and What to Do,” a16z crypto, July 18, 2025,

4. Source: Sven Luiv, “Kraken Launches US Futures Trading as Crypto Regulation Advances,” Brave New Coin, July 20, 2025

5. Source: David Floyd, “$6.3 Billion: 2018 ICO Funding Has Passed 2017's Total,” CoinDesk, Updated September 13, 2021,

6. Source: FM Contributors, “The Rise and Decline of ICOs: A Comprehensive Analysis,” Finance Magnates, June 14, 2023

7. Source: Camila Russo, “Sale of the Century: The Inside Story of Ethereum's 2014 Premine,” CoinDesk, Updated September 14, 2021

8. Count determined as number of unique email addresses in StartEngine’s database as of April 3, 2025. One individual may have more than one email address. In May 2023, StartEngine acquired assets of SeedInvest, including email lists for SeedInvest’s users, investors and founders. Go here for more details.

9. Source: Paul Tierno, “Crypto Legislation: An Overview of H.R. 3633, the CLARITY Act,” Congressional Research Service, July 7, 2025

10. Source: Jennifer J. Schulp, “Crypto Market Structure in Focus: The CLARITY Act,” CATO Institute, June 9, 2025

11. Source: Patrick Tan, “Poly-gone — 400 Million MATIC Missing?,” Medium, January 15, 2024

12. Source: Tangem Team, “How Many Cryptocurrencies Are There in July 2025?,” Tangem, June 30, 2025