Misunderstandings and Fact Clarification of the CLARITY Act - Transferred from the U.S. Senate Banking, Housing, and Urban Affairs Committee This week, the Senate will take a historic step towards the CLARITY bill. This is a comprehensive market structure legislation aimed at establishing a clear regulatory framework for digital assets. The bill is the result of over six months of bipartisan negotiations and extensive communication with regulatory agencies, law enforcement, academia, and industry. As the Senate Banking Committee prepares for critical procedural deliberations, the following are facts: Key point: Currently, the digital asset market operates under fragmented regulation and outdated rules. The CLARITY Act establishes clear and enforceable regulatory barriers, whose functions include: 1. Protecting ordinary investors 2. Keep investment and innovation in the United States 3. Safeguarding US National Security Misconception 1: The bill deviates from securities laws and will provide less investor protection and compliance obligations for digital asset securities. Fact: This statement is incorrect. This bill relies on long established principles of securities law to clearly define which digital assets belong to securities and which digital assets belong to commodities. The entities subject to regulatory requirements under this bill must submit information disclosures to the US Securities and Exchange Commission (SEC), comply with resale restrictions, and be subject to anti circumvention protection. Under this framework, securities remain securities, fraudulent behavior remains illegal, and the US Securities and Exchange Commission retains full enforcement power over digital asset securities. Misconception 2: This bill will put banks, taxpayers, and the financial system at risk. Fact: Fundamentally, this is an investor protection bill. It incorporates digital assets into a clear regulatory framework, holding wrongdoers accountable for fraud, manipulation, and abuse. The bill aims to prevent future crashes similar to FTX by providing a regulatory framework that ensures investors are aware of significant risks, prevents insider market manipulation, and punishes wrongdoers. Clear regulation can protect investors, but uncertainty cannot. The real risk lies in the failure to establish a clear regulatory framework. If there is a lack of clear regulatory framework, participants in the digital asset market will continue to operate overseas and only receive minimal federal regulation in the United States. Misconception 3: This bill creates loopholes to circumvent US rules. Fact: This bill fills the regulatory gap. It clearly delineates the jurisdiction between the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), establishes an advisory committee composed of both SEC and CFTC, aims to coordinate regulatory requirements for digital assets, and incorporates specific protective measures against regulatory evasion. Misconception 4: The bill fails to address illegal finance and national security risks. Fact: This bill incorporates the strongest illegal financial regulatory framework ever considered by Congress for digital assets. It ensures that key digital asset intermediaries comply with anti money laundering and counter-terrorism financing requirements, strengthens enforcement of sanctions compliance, and authorizes the Ministry of Finance to respond to high-risk foreign activities. Misconception 5: This bill enables illegal financial activities to occur through decentralized finance (DeFi) trading protocols. Fact: The opposite is true. This bill protects legitimate software development and innovation while combating illegal activities. The legislation clarifies the obligation of sanctions, requires centralized digital asset intermediaries that interact with decentralized finance (DeFi) protocols to implement risk management standards, and includes tailored rule making mechanisms for intermediaries that are not truly decentralized. Code is protected, but improper behavior is not protected. Misconception 6: The bill classifies software developers as criminals or prohibits self hosting. Fact: The bill explicitly protects software developers and reserves the right to self manage digital assets. Developers who publish or maintain code but do not control customer funds will not be considered financial intermediaries. Meanwhile, regulatory agencies still have the ability to respond to real threats in a targeted and appropriate manner. Misconception 7: This bill is written by the industry and serves the interests of the industry. Fact: The bill was formed on the basis of years of bipartisan cooperation, widely incorporating opinions from regulatory agencies and law enforcement agencies, and with the public interest as its core goal. It strengthens national security, protects investors, and ensures innovation occurs within a clear and enforceable framework of rules. Key points: This bill replaces uncertainty with clarity, strengthens law enforcement against illegal actors, and provides modern protection for customers, investors, and the financial system.