Cynthia Lummis Says CLARITY Act Would Keep Customer Crypto Out of Bankruptcy Estates

U.S. Senator Cynthia Lummis said the CLARITY Act would change how customer crypto assets are treated when digital asset platforms enter bankruptcy, with customer assets remaining the property of customers rather than becoming part of a company’s bankruptcy estate. According to Odaily, the bill would require regulated digital asset intermediaries to treat customer cash and digital assets as customer property and keep them separate from company assets. The bill would also generally prohibit brokers, dealers and exchanges from using customer assets for their own benefit or for the benefit of others without authorization. Lummis said the CLARITY Act is also intended to provide regulatory certainty for developers, strengthen investor protection and improve market integrity. It would clarify the roles of the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission in different areas of the crypto market. The article noted that the bankruptcies of Celsius and Voyager led to disputes over customer deposits. In January 2023, U.S. Bankruptcy Judge Martin Glenn ruled that cryptocurrency deposited into Celsius Earn accounts became company property under the terms of use, involving about 600,000 Earn accounts and about $4.2 billion in assets. The bill has passed the House and has not yet passed the Senate.