Coinbase CEO Backs CLARITY Act to Prevent Another Crypto Collapse
U.S. crypto regulation bill CLARITY Act has gained support from Coinbase CEO Brian Armstrong, who believes it would prevent another FTX-style collapse.
The CLARITY Act, formally known as the 'Cryptocurrency Clarity Act of 2024', aims to provide regulatory certainty by defining which digital assets are securities and which are commodities.
Armstrong stated that the bill would mandate stricter financial reporting, reserve requirements, and segregation of customer funds, making it harder for exchanges to misuse assets or hide losses like FTX did in November 2022.
The collapse exposed severe weaknesses in crypto governance, including commingling of customer funds, lack of transparent audits, and inadequate risk controls. The CLARITY Act seeks to address these gaps and establish a clear framework for crypto exchanges, custodians, and stablecoin issuers.