Key Takeaways
- Mark Esper urged passing the CLARITY Act to extend financial controls and protect US sanctions power.
- Failing to pass CLARITY could allow China to set digital payment rules and erode US dollar dominance.
- CLARITY expands the Patriot Act to stop rogue actors while keeping crypto innovation onshore in the U.S.
Mark Esper: CLARITY Act ‘Not Merely a Financial Services Bill’
While the Digital Asset Market Clarity Act, commonly referred to as the CLARITY Act, awaits a possible Senate vote in September, former defense officials have highlighted the initiative’s relevance in the defense field.
Mark Esper, who served as the U.S. Secretary of Defense under Donald Trump’s first administration, stressed that CLARITY’s effects go way beyond the financial services industry, reaching into America’s dollar-linked defense apparatus.
Esper stressed that CLARITY would establish relevant provisions to extend the controls that now apply to dollar transactions to the digital ecosystem, and that failing to pass it would risk ending the visibility into international financial flows and the sanctions capabilities that come with it.
“This is why the Clarity Act, now before the Senate, is not merely a financial services bill. It is also a national security bill, and it should be understood as such and passed with urgency,” he assessed in a recently published opinion piece.
Stablecoins have a special relevance in this new system, as they already settle billions, rivaling the largest credit companies in the world, with most of their value collateralized by U.S. treasuries.
To Esper, failing to act to preserve American dominance in this space would allow China, which is already investing in state-directed digital assets’ payment systems, to establish its own rules and finally erode the dollar’s role as the de facto standard for savings and settlement.
CLARITY expands Section 311 of the USA Patriot Act to the digital assets ecosystem, introducing several advantages in fighting rogue actors. “This would aim to stop North Korea, criminal syndicates and sanctioned regimes from exploiting offshore loopholes to evade the American financial perimeter,” he declared.
Equally relevant, Esper highlights that CLARITY would maintain cryptocurrency innovation onshore, allowing U.S. businesses to develop protocols implementing digital assets and achieve domination in the same way the internet was built: by private, American-aligned hands.
“We have a narrow window to set the terms of the next financial era rather than inherit terms set by our rivals… The Senate should choose to lead. It should pass the Clarity Act and send it to the president’s desk,” he concluded, even as the window for CLARITY to pass shrinks.
