Jul 16, 2026, 3:07 p.m.
4 min read
The collapse of FTX nearly four years ago made it clear that the U.S. lacked a workable regulatory regime that properly protected digital asset investors and consumers. The Clarity Act will fix this lingering gap, but we haven’t spent enough time highlighting the protections it would provide for those customers.
Consumers were hurt after the collapse of FTX because basic protections either arrived too late or were missing altogether. Many did not know where their assets were held, whether their property was held separate from the platform’s funds, or what would happen if the company failed. Regulators, bankruptcy courts, and enforcement agencies were left to sort through the wreckage, and the customers paid the price.
The Clarity Act would establish strong consumer protections in markets before crises occur. The Act would establish clear federal rules for the centralized platforms, brokers, dealers, and custodians that consumers use to buy, sell, and hold digital assets. Those rules would cover registration, supervision, disclosure, custody, segregation, market integrity, conflicts of interest, fraud prevention, and bankruptcy.
As a former financial regulator, I understand that no law can prevent every market failure or stop every bad actor. Fraud exists in every market, at every scale, but strong rules can mitigate the worst outcomes. They give regulators visibility, set obligations for companies before consumers engage with their products, and require firms to operate with basic and enforceable accountability. The bill is often described as crypto market structure legislation. That description is accurate, but it doesn’t capture the full scale. Market structure is the legal architecture that determines who must register with which agency, who supervises the market, what firms owe their customers, how assets are protected, what disclosures must be made, and what happens when something goes wrong.
Today, millions of Americans already use digital asset exchanges, brokers, dealers, and custodians. They open accounts, buy and sell assets, rely on platforms to execute transactions, and often trust intermediaries to hold their property. If those businesses are going to serve American consumers, they should operate under clear federal rules.
The Clarity Act would create those rules. Digital asset intermediaries would have to register, meet capital and risk-management standards, keep records, disclose material information to retail customers, monitor markets, address conflicts of interest, and follow conduct rules covering fraud, manipulation, marketing, supervision, and fair pricing. Those are basic safeguards in mature financial markets. They should apply here too.
The bill also tackles the question that matters most when a platform fails: what happens to the customer’s assets?
Consumers should know whether customer assets held by an intermediary are segregated, whether the company can use them, under what conditions they can be used, and how they will be treated if the company becomes insolvent. Those questions should be answered in law and disclosed upfront. They should not be left to bankruptcy courts after customers have already lost access to their property.
Clarity would establish these protections before a customer ever has to test them in bankruptcy proceedings. It creates customer asset protection requirements for registered digital asset intermediaries, including custody standards, segregation requirements, limits on misuse of customer property, and clearer treatment of customer assets in insolvency. That is one of the clearest lessons from the failure of the fraudulent digital asset exchange FTX: consumers pay the price when customer property rules are uncertain, conflicts are unchecked, and regulators are forced to reconstruct the facts after a collapse.
The bill also improves the information consumers receive before they put money at risk. Digital asset markets can be technical, fast-moving, and difficult for ordinary users and investors to evaluate. Consumers should not need to be software developers, securities lawyers, or bankruptcy experts to understand the basic risks of using a platform or purchasing an asset. The Clarity Act requires plain-language disclosures about technology, governance, trading activity, volatility, incentives, conflicts of interest, and other material risks.
Further, the Clarity Act gives responsible firms and law enforcement better tools to fight fraud, scams, and other criminal activity. It places Bank Secrecy Act obligations on digital commodity exchanges, brokers, and dealers. It creates a federal framework for digital asset kiosks, where consumers can be especially vulnerable to scams and pressure tactics. It gives firms a clearer path to temporarily slow suspicious transactions when acting in good faith, including at the request of law enforcement.
To be clear, if Clarity is not passed, that does not make digital assets disappear. It will not unwind the market, protect consumers from platforms they already use, or give regulators a clearer view into activity that is happening today. It will preserve the same gaps that have failed consumers before. The status quo is not a responsible solution.
While no law can guarantee there will never be another collapse, a robust federal framework can make one much less likely by requiring federal oversight, custody standards, customer property protections, plain-language disclosures, market integrity rules, fraud-prevention tools, and retail education.
Members of both parties have spent years working toward a durable framework for digital asset markets because the stakes are real.
Consumers should not have to wait for another crisis to get the protections they deserve.
Congress should pass the Clarity Act.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10