CLARITY Act is a national security bill, former US defense secretary says

Former U.S. Defense Secretary Mark Esper has urged the Senate to pass the CLARITY Act before its Sept. 15 procedural vote, arguing that delayed crypto rules could weaken U.S. financial and national security.

The Financial Times published Esper’s policy argument on Aug. 7, with the former defense secretary describing the Digital Asset Market Clarity Act as “not merely a financial services bill” but also a “national security bill.”

Esper, who led the Pentagon from 2019 to 2020, said U.S. power relies partly on the dollar and the payment networks that carry it around the world. Clear rules for digital assets, he argued, would help preserve Washington’s view into financial activity while supporting sanctions enforcement.

When crypto companies and transactions move through offshore venues with weaker controls, Esper said U.S. agencies lose some of their ability to follow funds and act against illicit networks. He also warned that delays in Washington give China more time to build payment systems outside U.S. influence.

Esper currently serves on Coinbase’s Global Advisory Council, which advises the exchange’s leadership on policy and strategic matters. Coinbase lists him among several former government and national security officials appointed to the council.

Coinbase Chief Policy Officer Faryar Shirzad shared Esper’s comments on X, quoting his call for lawmakers to treat the legislation with urgency.

CLARITY Act faces a 60-vote test on Sept. 15

Senate Majority Leader John Thune filed cloture on the motion to proceed to H.R. 3633 before lawmakers left Washington for their August recess. The resulting vote is scheduled for Sept. 15, after senators return to regular business.

Cloture would require support from 60 senators. Republicans cannot reach the threshold without Democratic votes, leaving the bill dependent on a cross-party agreement that has remained difficult during negotiations.

A successful vote would not send the legislation to the president. It would allow the Senate to start formally considering the measure, after which lawmakers could debate the proposal and offer amendments before a final passage vote.

The House approved H.R. 3633 by 294–134 in July 2025. The Senate Banking Committee later advanced its market-structure text by a 15–9 vote, with two Democrats joining Republicans.

Any Senate text that differs from the House-approved bill would need additional action before reaching the White House. Congress could send the revised version back to the House or form a conference committee to settle differences between the two chambers.

The proposal would divide responsibility for digital assets between the Commodity Futures Trading Commission and the Securities and Exchange Commission. Qualifying digital commodities would generally come under the CFTC, while the SEC would keep authority over tokens and transactions treated as securities.

For U.S. investors, the division could determine which agency supervises trading platforms, brokers, and other intermediaries. It could also create federal registration standards for parts of the spot crypto market that do not currently face routine CFTC supervision.

Esper links crypto oversight to sanctions enforcement

Esper’s security case rests partly on the role of the U.S. dollar in global trade and finance. American authorities can monitor or restrict transactions that pass through banks and payment networks subject to U.S. law, giving Washington tools to enforce sanctions and investigate illicit finance.

Digital asset activity routed through lightly regulated foreign platforms can make that work harder, according to Esper. He cited threats from sanctioned networks and North Korean cyber groups while arguing that a U.S.-regulated market would give law enforcement more reliable access to transaction and customer records.

Treasury records have identified the Lazarus Group as a North Korean state-sponsored cyber organization. U.S. authorities have linked the group to major digital asset thefts, including the roughly $625 million attack on the Ronin network in 2022.

Esper also pointed to China’s work on payment infrastructure that does not depend on U.S.-controlled financial channels. In his assessment, allowing other countries to set digital asset standards first could reduce Washington’s influence over future payment networks.

Parts of the Senate proposal address the same concerns through specific enforcement powers. A merged draft released in July contains an illicit-finance title covering foreign adversary activity, law enforcement training and international cooperation.

Section 10303 would expand the Treasury Department’s special-measures authority under Section 311 of the USA PATRIOT Act. Under the proposal, Treasury could prohibit or place conditions on certain digital asset transfers linked to foreign jurisdictions, institutions or transaction classes found to present a primary money-laundering concern.

Senate Banking Committee Chair Tim Scott has also argued that the legislation would make it harder for criminals and foreign adversaries to misuse the U.S. financial system. Esper’s argument places the same provisions within a defense and foreign-policy framework.

Senate disputes continue despite security argument

National security support does not resolve the disagreements holding up the bill. Lawmakers and industry groups remain divided over stablecoin rewards, decentralized finance rules, and ethics restrictions for public officials with digital asset interests.

The current draft distinguishes between passive returns on idle stablecoin balances and rewards generated through activities such as lending or supplying liquidity. Banks have pressed lawmakers to prevent exchanges and stablecoin businesses from offering interest-like products without the capital, insurance, and oversight rules applied to bank deposits.

In July, U.S. banking organizations asked Senate leaders to revise Section 404, warning that unclear restrictions could move deposits away from community and regional banks. Circle shares fell more than 2% in pre-market trading as the bank lobbying dispute added to uncertainty surrounding the legislation.

Crypto companies have argued that overly strict limits could push customers toward less regulated services. Coinbase, which earns revenue from its relationship with Circle and USDC-based customer rewards, has sought changes to the proposed restrictions.

Political ethics provisions have created a separate obstacle. Democratic lawmakers have sought tighter rules covering digital assets issued or held by senior government officials, while disagreements remain over whether officials should have to divest existing holdings.

Decentralized finance has also complicated negotiations because lawmakers have not agreed on how to classify protocols or determine when a blockchain network is sufficiently decentralized. The classification can affect whether a token falls under SEC securities rules or the CFTC’s proposed digital commodity framework.

Prediction-market traders have responded to the delays by lowering their expectations for passage. An August analysis found that passage odds had fallen to 10% after reaching 82% in February, with unresolved policy disputes and the limited Senate calendar weighing on the contract.

CFTC prepares an alternative regulatory path

While Congress considers the bill, CFTC Chair Michael Selig has said his agency can continue developing digital asset proposals within its existing authority.

“Crypto will get market structure regardless of bill,” Selig said in remarks reported on Aug. 20.

The CFTC already oversees crypto derivatives, including regulated futures and options. It can also pursue fraud and manipulation in spot commodity transactions, but it lacks routine supervisory power over spot crypto exchanges comparable to its oversight of registered derivatives markets.

Any regulations adopted without new legislation would have to remain within the Commodity Exchange Act. The agency could address derivatives venues, intermediaries, and disclosure requirements, although Congress would still need to grant the full spot-market powers contemplated by the CLARITY Act.

As previously reported by crypto.news, Selig did not identify which proposals were ready, when the CFTC could release them, or how much of the planned framework could proceed under current law.

President Donald Trump called for a “fair version” of the CLARITY Act during an Aug. 19 White House meeting attended by representatives from Coinbase, Ripple, Gemini, Kraken, Anchorage Digital, Chainlink Labs, Grayscale and OKX.

The CFTC’s Innovation Advisory Committee met the following day to discuss digital assets, artificial intelligence and prediction markets. Its crypto session covered customer protection, market integrity and ways the commission could use its present authority, but the advisory body cannot adopt binding regulations or expand the agency’s jurisdiction.