By Mark Hays, Associate Director for Crypto & Fintech with AFR/AFREF and with Demand Progress
Soon, Senators will face a stark choice when the crypto industry’s top priority, the CLARITY Act, comes up for a vote. They can stand firm against the crypto industry’s aggressive and well-funded efforts to buy policy outcomes, stand up for people, and vote against this fatally flawed bill. Or, they capitulate to the industry and billionaires and pass legislation that locks in crypto deregulation, legitimizes the industry’s worst practices, emboldens the President’s never-ending crypto grift, and puts our entire financial system at risk.
CLARITY won’t create regulatory clarity. That’s just intentionally misleading branding. The industry-crafted CLARITY Act legitimizes the industry’s bad practices, under a paper-thin veneer of regulatory protection. This gives crypto access to all the benefits of mainstream finance with few of the obligations and gives traditional Wall Street firms a free pass to jump into the crypto pool, despite the risks. And, it will give ordinary investors—including workers saving for retirement—the impression that crypto is safe, when it is anything but.
As such, CLARITY benefits the crypto companies and billionaires but exposes everyone else—including those that don’t use crypto—to the industry’s endemic fraud, scams, hacks, exploitation, and volatility.
The CLARITY Act locks in weak investor and consumer protections.
The legislation embraces a hands-off regulatory approach that lets big crypto firms and billionaire backers continue to manipulate or cheat smaller investors. CLARITY allows firms to hawk risky crypto tokens with far less oversight, less investor disclosure, and fewer obligations to their customers if these investments go sour than is allowed in traditional stock markets. Crypto exchanges will face fewer obligations to customers trading crypto, fewer checks on their conflicts of interest, and will have big incentives to exploit small investors and manipulate crypto markets. This entrenches crypto’s core exploitative business models and gives them the blessing of law.
The CLARITY Act emboldens fraudsters and will allow crypto scams to flourish.
Crypto is a major vehicle for fraudsters and scammers to target people—especially older adults—and steal their money, often without recourse or redress for the victims. The FBI reported that in 2025, half of all online financial crime involved crypto, with people over 60 years old reporting the most crypto-related losses. But this bill fails to provide meaningful protections, guardrails, and safeguards from fraud, scams, and abuse. It exempts large portions of the cryptoverse from meaningful oversight or liability for the scammy activities their platforms facilitate. Instead of mitigating these scams, CLARITY’s weak framework and the hands-off crypto regulatory approach from the Trump administration would only amplify this epidemic of crypto scams.
The CLARITY Act enables money laundering.
Crypto has become the vehicle of choice for traffickers, rogue states, and other bad actors to finance their harmful activities and launder their ill-gotten gains. CLARITY’s loopholes allow crypto firms and intermediaries, especially decentralized (or DeFi) firms, to avoid many basic anti-money laundering (AML) requirements. This includes requiring firms to abide by sanctions targeting some of the world’s worst bad actors. The bill’s lip service to other AML rules fails to take a system-wide approach to compliance across the entire crypto ecosystem. The resulting swiss-cheese framework will simply give bad actors a tool kit to evade law enforcement, while giving crypto platforms an alibi for failing to police widespread illicit finance throughout the crypto industry.
The CLARITY Act undermines market integrity and foments instability.
CLARITY threatens to erode the fabric of financial regulation for all markets, not just crypto. Its exemptions for DeFi platforms or assets from more rigorous oversight—or in some cases, any oversight at all—will allow traditional financial actors, not just crypto firms, to evade existing financial market rules. It also allows crypto firms to “tokenize” traditional stocks with scant guardrails, which threatens to create a new shadow stock market full of risks and would upend core investor protection and market stability rules established in the wake of the Great Depression and 2008 financial crisis. This puts not just crypto investors in harm’s way, but also risks the entire financial system—banks, retirement savings, the stock market—getting caught in the undertow during the next inevitable crypto crash.
The CLARITY Act fails to hold President Trump, his family, and the crypto billionaires accountable for their spree of self-dealing and self-enrichment.
The President and his family have garnered billions in profits using the President’s office to promote sketchy crypto products that have fleeced millions of investors, been vehicles for influence peddling, and raised serious national security concerns. The crypto industry has been a willing partner in this, fostering an unprecedented culture of corruption. The industry spent hundreds of millions in the 2024 elections to buy access to the Trump administration. The administration has responded by dismissing criminal lawsuits against the industry, rolling back regulations, and pardoning convicted crypto felons—including major investors in Trump family ventures.
This egregious pattern of pay-to-play politics and conflicts of interests make it impossible to imagine Trump regulators holding any crypto scofflaws accountable even to CLARITY’s minimalist oversight. Instead, passage of CLARITY without robust ethics provisions would give aid and comfort to the Trump family and their wealthiest crypto industry backers at the expense of investors and would directly enrich the President and his family.
The paltry ethics proposal released by the White House and Senate Republicans this week fails to create any accountability for the Trump family, showing these parties aren’t serious about pursuing meaningful ethics proposals.
Most people don’t consider crypto legislation a high priority and don’t trust crypto’s outsized political influence. People don’t want crypto to craft giveaway bills that reward crypto and pick people’s pockets.
We already know what happens when wealthy financial interests write their own rules: it prompts a flood of rampant, greedy, reckless speculation, like that which precipitated the 2008 financial crisis and devastated the financial security of millions of people for a generation.
Enough is enough. The Senate needs to stand up to this unmitigated greed that rewards a few crypto billionaires at the expense of everyone else and derail the CLARITY Act