How the CLARITY Act Defines and Evaluates "Mature Blockchain Systems" 1. What is a “Mature Blockchain System”? A blockchain is considered “mature” (and thus eligible for lighter, commodity-like regulation under the CFTC) if it is not controlled by any person or group acting together. This means no single entity (like a core dev team, foundation, or company) can unilaterally alter, halt, or direct the network. The law explicitly requires open-source code and decentralized governance. 2. Regulatory Evaluation Process ⦁ Certification: Projects must file disclosures with the SEC, showing how much was raised, development timelines, and evidence of decentralization. ⦁ Reporting: Semi-annual updates are required, detailing progress toward decentralization. ⦁ Challenge Mechanism: If a project claims “mature” status, the SEC has 60 days to rebut. If not, the status is automatically granted. The CFTC also reviews for commodity status. ⦁ Timeframe: Projects have up to four years from launch (or from passage of the law) to reach maturity. 3. Decentralization Criteria (How “The Suits” Decide): Regulators look at: ⦁ Who controls protocol upgrades and key infrastructure? ⦁ Is there a single entity with special admin privileges or “kill switches”? ⦁ Is governance on-chain, and can any group dominate votes? ⦁ Is the codebase open-source and maintained by a diverse set of contributors? ⦁ Are validators/miners or sequencers sufficiently distributed? Blockchains like Bitcoin, Ethereum, and Litecoin pass because no single group can control or censor the network. Solana, Cardano, and BNB Chain have been flagged for “foundational control”, meaning their core teams or foundations retain outsized influence, whether through code commits, validator control, or token governance. 4. Security-to-Commodity Transition A unique clause lets tokens initially sold as securities (centralized, pre-launch, VC-backed, etc.) become commodities if/when the underlying chain becomes decentralized. This is a formal process: ⦁ The issuer applies for reclassification. ⦁ Regulators review the decentralization evidence. ⦁ If approved, the token moves from SEC to CFTC oversight. 5. Why This Matters For the first time, US law gives a clear, actionable path for projects to prove decentralization and escape securities rules, ending the “vibes-based” regulatory chaos. The process is transparent and time-bound, so it can’t drag on indefinitely. H/T @elfa_ai bot