CLARITY Act Updates Crypto Regulations with Key Protection for Long-Term Holders

The CLARITY Act has made significant changes to the way crypto exchanges and platforms operate in the US. According to Senator Cynthia Lummis, the bill places crypto exchanges, DeFi platforms, and crypto ATMs under existing Anti-Money Laundering (AML) and sanctions regulations.

Lummis also highlighted that the bill closes the 'DINO' loophole, which allowed some platforms to claim decentralization while still holding operational control. The revised Digital Asset Market Clarity Act provides federal legal protections for self-custodied digital assets sitting in inactive wallets.

A little-known provision in the bill protects long-term holders from having their crypto seized under state escheat or abandoned property laws when a wallet hasn't moved funds. This could benefit firms like Coinbase and Circle, providing more clarity on digital assets and stablecoins.