Clarity Act Seeks Clear Ownership Rights for Customer Crypto Assets

U.S. Senator Cynthia Lummis has introduced the Clarity Act, a proposed federal law aimed at safeguarding customer crypto assets in exchange bankruptcies.

The bill's primary goal is to establish clear statutory ownership rights over deposited digital assets, ensuring that customers retain control of their cryptocurrencies even if the platform holding them files for bankruptcy.

Lummis pointed to the collapses of Celsius Network and Voyager Digital as driving forces behind the legislation. In both cases, customer-deposited cryptocurrencies were treated as part of the exchange's estate, rather than belonging to the customers themselves. This meant that many customers became unsecured creditors, often receiving only a fraction of their original holdings in fiat or other assets.

The Clarity Act would change this dynamic by requiring exchanges to maintain clear segregation of customer assets from their own corporate funds and imposing stricter custodial standards and auditing requirements.