Svmuu News: U.S. Senator Cynthia Lummis stated that the CLARITY Act will change how clients’ crypto assets are handled when digital asset platforms enter bankruptcy proceedings; client assets should remain the property of the clients rather than being included in the company’s bankruptcy estate.
The bill requires regulated digital asset intermediaries to treat client cash and digital assets as client property and to segregate them from the company’s assets. The bill also generally prohibits brokers, dealers, and exchanges from using client assets for their own benefit or that of others without authorization.
The bankruptcies of Celsius and Voyager sparked disputes over the ownership of 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 service, affecting approximately 600,000 Earn accounts and about $4.2 billion in assets.
Lummis stated that the CLARITY Act also aims to provide regulatory certainty for developers, strengthen investor protection, and enhance market integrity. The bill would clarify the responsibilities of the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) in different areas of the cryptocurrency market. It has already passed the House of Representatives but has not yet been approved by the Senate.