Senator Cynthia Lummis is pushing the CLARITY Act through a Senate committee this week. The bill would reclassify crypto deposits as customer property, closing a gap in bankruptcy protections that leaves crypto users vulnerable when exchanges fail.
What the bill does
The CLARITY Act would treat digital asset deposits held by custodians the same way traditional bank deposits are treated in bankruptcy. That means if a crypto exchange goes under, users' funds would be considered their property, not the exchange's. Right now, crypto deposits are often lumped in with the exchange's assets, leaving users as unsecured creditors fighting for scraps.
Why the gap exists
Current law doesn't clearly define crypto deposits. Banks have clear rules — customer deposits are off-limits to creditors. Crypto exchanges operate in a gray area. The CLARITY Act aims to fix that by writing a clear legal standard into the U.S. Code.
The path forward
The bill is now in committee. Lummis is working to bring it to a full committee vote. If it passes, it would move to the Senate floor. The timeline is tight, but the push is on.
