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Senator Cynthia Lummis argued on May 28 that the CLARITY Act is the missing consumer-protection fix for digital asset custody in US bankruptcy law. Without the statute, she said, customers of a bankrupt digital asset exchange hold no guaranteed claim to their own assets and are pushed into the same creditor line as Wall Street firms and their lawyers.
Why it matters
The framing matters because it repositions CLARITY from a structural market-structure bill into a customer-rights bill. Consumer protection is the legislative lane that travels furthest in a divided Congress — and Lummis's argument is built to travel exactly there, putting everyday exchange users ahead of institutional counterparties in the bankruptcy waterfall rather than alongside them.
Market impact
The political push comes as custody and segregation rules for digital asset platforms remain unresolved at the SEC and CFTC, leaving US venues operating under a patchwork that critics say disadvantages retail holders in any wind-down. Whether CLARITY's bankruptcy title gains traction shapes how US exchanges structure custody, how offshore competitors price their market-access premiums, and how liquid the on-shore digital asset market remains.
Frequently asked questions
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What is the CLARITY Act in one sentence?
It's the pending US bill that would assign market-structure oversight of digital assets between the SEC and CFTC, with a dedicated title on bankruptcy treatment for exchange-held customer assets.
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Why did Senator Lummis call it a consumer-protection issue?
Because under current law, customers of a bankrupt digital asset exchange have no guaranteed right to their own assets and get pushed into the same creditor line as Wall Street firms and their lawyers.
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Which committee has jurisdiction over CLARITY?
CLARITY has moved through the Senate Agriculture and Banking committees, with the CFTC and SEC titles handled on parallel tracks before floor consideration.
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How would CLARITY change exchange bankruptcy outcomes?
The bill's bankruptcy title would elevate customer asset claims above general unsecured creditors, codifying segregation and treating customer funds as belonging to customers rather than to the estate.
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What happens to US exchanges if CLARITY stalls?
US venues continue operating under a patchwork of SEC and CFTC guidance with no codified customer-priority rule, which critics argue disadvantages US venues against offshore competitors with clearer custody frameworks.
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