America has a habit worth breaking: we invent a transformative technology, like semiconductors, let it drift overseas, and then spend decades and billions of dollars trying to bring it back.
We are currently watching this script play out with digital assets, but we now have a rare, bipartisan window to rewrite the ending. This week, bill text that would regulate the industry for the first time was released by Sen. Cynthia Lummis (R-WY). The question now before Congress is whether the next global chapter of financial innovation is built on American soil, under American rules, and powered by American values.
By passing the Clarity Act (CLARITY) Congress can achieve a historic, dual victory: it can definitively safeguard the tens of millions of everyday Americans already participating in this dynamic market while cementing our position as the global capital of financial advancement.
Roughly 67 million Americans, about one in four, already own digital assets. When shares of some of the country’s most sought-after companies have come to market, tens of thousands of retail investors have bought tokenized versions on the blockchain rather than wait for a brokerage allocation. Yet they do this without comprehensive federal legislation that clearly delineates rules and responsibilities across disparate regulators and rulebooks.
For years, industry stakeholders, regulators, and investor protection advocates have agreed on the need to address this gap urgently. The last cycle’s failures were not about digital asset technology. FTX and Voyager underscore existing regulatory gaps. What is instructive, however, is what did not fail. FTX’s own CFTC-registered clearinghouse, for example, recorded no customer losses even as the parent imploded. Where registration and segregation rules applied, the money was safe.
Indeed, if you map CLARITY’s framework directly over the wreckage of FTX, the preventive power of clear rules becomes undeniable. Customer assets would have to be segregated and treated as the customer’s at all times, barring FTX sweeps of customer money to its affiliated trading arm, Alameda. Properly regulated, customer assets would have to sit with a qualified, independent custodian, but FTX held everything in-house. Using customer property as the firm’s own would be explicitly unlawful. A regulator would have standing authority to examine the books before a shortfall metastasized, yet no one had that authority over FTX. CLARITY would provide customer assets priority ahead of general creditors’ claims in bankruptcy, ensuring faster and fuller recoveries than FTX customers received as unsecured creditors.
Skeptics who doubt that registration and examination mitigate negative outcomes should look at the markets these rules currently govern. When MF Global improperly tapped segregated customer funds, its status as a registered futures commission merchant meant the shortfall was detected within hours, and customers protected by the Commodity Exchange Act’s segregation rules recovered 89% of their funds, rising to closer to 94% post-settlements. Unfortunately, FTX asked millions of customers to trust it, but no one had the authority to validate that trust.
Beyond the need for consumer protection, innovation is a national priority that improves financial outcomes and empowers consumers and businesses alike. Done right, this framework draws bright lines between the SEC’s authority over tokenized securities and the CFTC’s over digital commodities, tailors protections to each asset’s actual risk profile, and confirms a common-sense principle: investors do not lose protections under federal securities laws just because a security lives on a blockchain. That is not deregulation. It is the guardrail that keeps innovation onshore, under American law.
Which brings us to a final reason requiring comprehensive federal legislation. We have seen what happens when we let a lead slip. The U.S. invented the semiconductor, then watched chip manufacturing migrate to Taiwan and South Korea as our share of global production fell from 37% in 1990 to roughly 12% today. We are now spending more than $50 billion in public money through the CHIPS Act to bring this activity back home.
Put those together, and the status quo has no honest defenders. If you are a skeptic, you should want mandatory segregation, custody, and examination — the rules that would have constrained FTX. As we know, vacuums carry a national security cost, too, since a rigorous framework brings intermediaries under our financial crime laws and gives law enforcement tools it lacks today. The one constituency served by the current vacuum is offshore operators and the fraudsters who prefer markets that operate in the dark.
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The momentum is real. The House passed its bipartisan version last July, 294 to 134. In the Senate, both committees of jurisdiction, Banking and Agriculture, have acted. It is critical to get the bill right and pass CLARITY, not abandon a framework whose core is a set of protections Americans need.
America has always set the global standard in finance by pairing bold innovation with the rule of law. We did it for equities, for futures, and for modern payments, and each time, clear rules did not smother the market. Digital assets are now at that threshold. Let us keep this market, and the American innovation underpinning it, on American soil. The time is now.
Ji Hun Kim is the CEO of the Crypto Council for Innovation, a global trade organization.