Key Takeaways
- Former US Defense Secretary Mark Esper argues the CLARITY Act should be treated as national security legislation, not simply crypto market reform.
- Esper cites China’s alternative payment infrastructure and North Korea’s use of crypto as reasons to keep digital asset activity within US regulatory reach.
- The intervention comes as the Senate has delayed action on CLARITY until after its August recess, leaving several political disputes unresolved.
Former US Defense Secretary Mark Esper has reframed the stalled CLARITY Act as a national security issue, arguing that failure to establish US rules for digital assets could weaken Washington’s control over financial infrastructure as China builds competing payment systems.
In an Aug. 7 Financial Times opinion piece, Esper called CLARITY a “national security bill”, arguing that blockchain-based payment systems are becoming strategically important because of their potential impact on dollar dominance, sanctions enforcement and visibility into illicit financial flows.
Esper served as Defense Secretary from 2019 to 2020 and is currently a member of Coinbase’s Global Advisory Council, an affiliation relevant to his intervention, as Coinbase has been one of the crypto industry’s most prominent supporters of market-structure legislation.
China Emerges as the Bigger Strategic Argument
Esper’s argument goes beyond the question of whether the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) should oversee individual crypto assets.
He contends that the larger question is who controls the financial infrastructure being built around blockchain technology.
China, in his view, is developing state-directed payment systems designed to reduce reliance on financial networks subject to US oversight. If digital asset businesses and capital move offshore due to regulatory uncertainty, Esper argues, Washington could lose some of the visibility and leverage that have historically supported sanctions and the dollar’s global role.
That gives CLARITY a geopolitical dimension beyond its better-known regulatory provisions.
The legislation is designed to establish a clearer division of responsibilities between the SEC and the CFTC for digital assets and to create rules governing digital commodity intermediaries. The House originally passed H.R. 3633 by a vote of 294 to 134 in July 2025.
North Korea Adds the Illicit Finance Angle
Esper also tied the legislation to threats from North Korea, sanctioned regimes, and criminal networks.
His argument centers on bringing more crypto businesses within US compliance structures rather than allowing activity to migrate to lightly regulated offshore platforms.
Among the provisions highlighted by Esper are Bank Secrecy Act requirements for exchanges, brokers, and dealers, and an extension of Treasury special-measures powers under Section 311 of the USA Patriot Act to digital assets. He argues that those tools could increase Washington’s ability to disrupt illicit crypto flows involving sanctioned actors.
The national security framing could give supporters another route to winning lawmakers who remain unconvinced by arguments focused primarily on crypto innovation or industry competitiveness.
SEC Moves Ahead With Crypto Rules as Congress Stalls
The legislative delay is also increasing the importance of the SEC’s own regulatory agenda. The agency is preparing its first major crypto rulemaking package as the Senate heads into its August recess without passing the CLARITY Act. Senate Majority Leader John Thune has instead filed a cloture motion for a procedural vote on Sept. 15, leaving the bill facing a narrowing legislative calendar.
Under SEC Chair Paul Atkins, the regulator has been developing what it calls “Regulation Crypto,” a framework intended to create tailored rules for digital asset offerings. Atkins has outlined potential exemptions and safe harbors that could allow some crypto projects to raise capital without going through the full SEC registration process for conventional securities offerings.
The SEC’s 2026 regulatory agenda specifically calls for clearer rules governing crypto capital formation, custody, and the trading of tokenized securities onchain.
That creates an alternative regulatory path if Congress remains unable to agree on comprehensive market structure legislation.
CLARITY Still Faces a Difficult Senate Path
Esper’s intervention arrives at a difficult moment for the bill.
The Senate Banking Committee advanced CLARITY in May by a 15-9 bipartisan vote, and Sen. Cynthia Lummis released updated text on July 22 that combines work from the Banking and Agriculture committees.
But 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. As mentioned earlier, Senate Majority Leader John Thune has indicated the chamber intends to return to the legislation after the recess.
That means Esper’s warning lands as the debate shifts from whether America needs crypto rules to what strategic risks Washington faces if those rules remain unresolved.
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Dr. Guneet Kaur is a senior editor at CCN.com and a Science Fellow at Exponential Science. She is a fintech and blockchain expert with extensive experience in digital finance education, blockchain ecosystems, and cryptocurrency markets. She has worked with global media such as Cointelegraph, as well as education and blockchain platforms, to design and lead strategic content and learning initiatives. As an educator and assessor for top-tier executive programs, she bridges real-world fintech trends with academic insight.
Dr. Kaur is also a published researcher and peer reviewer across fintech and data science journals, including Financial Innovation Journal and International Journal of Big Data Intelligence and Applications. Her work spans data-driven analysis, Web3 innovation, and technical content development. With a strong foundation in both industry and academia, she translates complex financial technologies into practical applications, empowering learners, professionals, and institutions across the rapidly evolving digital finance landscape.
