CLARITY Act Moves Into National Security Spotlight

Esper Frames Crypto Regulation as a Defense Issue

Former U.S. Defense Secretary Mark Esper is pressing the Senate to pass the Digital Asset Market CLARITY Act, arguing that the legislation carries implications well beyond financial markets. Esper urged senators to pass the CLARITY Act in a Financial Times op-ed, arguing that digital asset market structure should be treated as a national security issue as well as a financial regulatory question. He led the Pentagon from 2019 to 2020 and now serves as an adviser to Coinbase.

Esper cites China's alternative payment infrastructure and North Korea's use of crypto as reasons to keep digital asset activity within U.S. regulatory reach. He stressed the CLARITY Act would extend Patriot Act provisions to digital assets, modernizing the identification and special measures apparatus against foreign institutions to target threat actors such as North Korea and criminal organizations. He also warned that without the bill, crypto activity could shift to unregulated foreign markets.

What the Bill Does and Where It Stands

The Digital Asset Market Clarity Act is proposed U.S. legislation intended to create a clearer federal framework for digital assets, addressing when a crypto asset should be regulated by the SEC and when the CFTC should oversee it. The CLARITY Act would grant the CFTC exclusive jurisdiction over digital commodity spot markets, while maintaining SEC jurisdiction over investment contract assets. It would also require exchanges, brokers, and other financial institutions that engage with the crypto sector to comply with anti-money laundering and know-your-customer regulations. On the Treasury side, the updated bill expands Treasury authority over digital asset transfers tied to foreign money laundering concerns.

The bill has had a long road through Congress. The House passed the CLARITY Act 294 to 134 in July 2025, and the Senate Banking Committee later advanced its version 15 to 9 in May 2026. However, the Senate failed to complete a floor vote before its August recess. Outstanding disagreements include Democratic demands for stronger ethics restrictions related to political officials' crypto interests and Republican concerns about how digital asset products could affect community banks.

Senate Majority Leader John Thune filed cloture, scheduling an initial procedural vote for September 15. A cloture vote on the motion to proceed requires 60 votes to succeed. If it fails on September 15, the bill does not advance to the floor for debate or amendment votes, and its 2026 legislative window closes.

Sources:
Bitcoin.com News: Esper Warns Senate to Pass CLARITY Act for National Security
Crypto.news: CLARITY Act Gains U.S. Security Backing from Ex-Defense Chief
U.S. Senate Banking Committee: The Facts on the CLARITY Act