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 utilize 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.
