Protecting Crypto Consumers Isn’t a Debate. It’s a Duty.

The need for clear, comprehensive digital-asset rules ought to be common ground. Yet for too long, Washington has tossed around consumer protection in crypto as a political football. That inaction has left tens of millions of Americans stranded in a regulatory dead zone.

Giving consumers the rules they deserve should be part of the job. As a senior adviser at the Securities and Exchange Commission (SEC) during the Obama administration, I helped design the Commission’s initial response to emerging financial technologies. We understood that consumer protection was non-negotiable. And we understood that effective oversight of new innovation requires clear rules, direct oversight, and the authority to enforce both. 

Congress now has the chance to provide exactly that for digital assets. The Senate is poised to vote on the Clarity Act, landmark legislation that would give digital asset markets the clear, comprehensive oversight that Americans expect everywhere else. The House already passed the Act with broad support: nearly 300 Members, including 78 Democrats, voted “yes.” The Senate should do the same and cement this overdue framework. It would protect consumers, hold bad actors accountable, and empower regulators to act before harm occurs.

Financial regulation exists to protect people with less information and power than the institutions serving them. Yet the prior Commission’s approach to digital assets replaced clear rules with uncertainty, forcing consumers and companies alike to navigate conflicting interpretations. Regulators often revealed shifting views through backward-looking lawsuits. And foundational questions – like which rules apply, who has authority, and how platforms must operate – depended on case-by-case resolution.  

That approach invited inconsistent outcomes, delayed accountability, and preventable harm. Enforcement remains indispensable: bad actors should be pursued, and victims compensated. But enforcement cannot replace regulation. Rules must be written before they can be enforced. 

The lack of digital asset rules happened because regulators defaulted on their duty, not because the industry resisted regulation. In 2022, Coinbase asked the SEC to undertake rulemaking for digital assets. The SEC refused without meaningful explanation, so Coinbase went to court – and won. A unanimous federal appeals panel called the denial “arbitrary and capricious” and ordered the agency to provide a reasoned response. When a company must sue its own regulator just to obtain a workable framework, something is deeply broken. 

The Clarity Act would fill that void, shifting consumer protection from aspiration to obligation. It would create a federal regulatory baseline for the digital-asset platforms that tens of millions of Americans already use, including measures to prevent familiar sources of harm. The bill mandates direct protections for customer assets through strict segregation and custody requirements, the safeguards whose absence turned the FTX collapse into a catastrophe. 

Platforms also would face limits on conflicts of interest, including trading against their own users or using inside information for personal gain. And projects would need to disclose essential information –  like technical frameworks, token economics, and transaction histories – so consumers can make informed decisions.

Those are not industry favors. They are the basic infrastructure for a functioning market,  one in which consumers can participate with confidence and law enforcement can respond with stronger tools.

Just as importantly, the legislation recognizes that a national market needs a national rulebook. A patchwork of conflicting state requirements can leave consumers with different access, protections, and answers depending on where they live. Federal uniformity does not mean abandoning states’ traditional role in fighting fraud. It means responsible companies and consumers are not trapped in a maze of inconsistent requirements that bad actors can exploit.

Reasonable people can debate the details of Clarity, and they should; legislation this consequential deserves scrutiny. But the choice before Congress is not between Clarity and a flawless alternative.  It’s between a comprehensive framework that would protect consumers for decades – a rare product of bipartisan compromise – and no federal framework at all. Simply put, if the Senate rejects this legislation, consumers don’t get a better baseline – they get none. 

Public trust in financial markets is not built through press releases or case counts. It is earned when ordinary people can participate in a market without fear of being blindsided by individual misconduct or structural abuse. Leaving millions of Americans in regulatory limbo while legislators debate jurisdiction does not shield consumers; it exposes them.

When I served at the SEC, protecting consumers was not optional, and it was never political. 

The Senate should pass the CLARITY Act and finally make that principle the law of the land for digital assets.

Ryan VanGrack is Vice Chair of Coinbase