Lummis Pushes CLARITY Act to Protect Crypto Customers from Exchange Failures

Senator Cynthia Lummis has been advocating for the CLARITY Act, which aims to protect customer assets in case of exchange failures. According to Senator Lummis, when a crypto exchange goes bankrupt, customers are forced to line up behind lawyers and creditors with low priority, hoping to recover only a fraction of their assets.

The proposed legislation would categorize digital commodities as customer property within the U.S. Bankruptcy Code, granting crypto customers rights comparable to those of holders of stocks or commodities. The bill would require exchanges and brokers to hold client assets at specialized custodians, separate from their operating funds.

Senator Lummis pointed out that the current system leaves individual users competing with large institutional creditors over the remaining assets. She emphasized that the CLARITY Act ensures consumers' assets are protected just like they would be with traditional institutions.