CLARITY Act: Identity and Fraud Controls for Crypto Exchanges

The CLARITY Act would establish registration and oversight requirements for digital asset exchanges, brokers, and dealers while introducing enhanced disclosure, anti-fraud, and market integrity provisions.² The legislation would establish a formal regulatory framework intended to provide greater clarity over how digital assets are regulated in the U.S.

A more formal regulatory framework would also increase the importance of the controls that sit behind customer access and ongoing account activity. For crypto exchanges, that could mean greater scrutiny of how customers are identified and how risk is monitored throughout the customer relationship.

Identity Verification Becomes a Competitive Necessity

Greater regulatory certainty could encourage wider participation from institutional investors, banks, payment providers and other regulated financial organizations. We have already begun to see this as large brokerage firms and fintech companies have opened their platforms to crypto trading.³ These organizations typically require robust Know Your Customer (KYC) and Customer Identification Program (CIP) controls for other account activity on their platforms to meet regulatory requirements.

Exchanges may therefore need to assess whether their existing identity and fraud controls are robust enough for a more mature regulatory environment. Depending on their risk profile and existing capabilities, this could include:

• Digital identity proofing
• Document authentication
• Biometric verification
• Synthetic identity detection
• Ongoing customer monitoring
• Risk-based authentication

The ability to accurately verify customers while maintaining a seamless user experience could become a key differentiator as the industry matures.

Fraud Mitigation Becomes More Important as Markets Grow

Greater regulatory certainty could support wider participation in digital asset markets. If that brings more customers and higher transaction volumes, it can also create new opportunities for criminals seeking to exploit account openings, payment flows and digital asset transfers.

To address these risks, exchanges are likely to increase investments in fraud prevention technologies that support new account fraud detection, account takeover prevention, mule account identification, behavioral analytics, transaction monitoring and sanctions and watchlist screening.

What Happens Next for the CLARITY Act?

The CLARITY Act has not become law. After passing the U.S. House of Representatives in 2025, the bill failed to advance in the Senate on September 15, 2026, when a procedural vote fell short of the 60 votes required to move forward.⁴ A motion to reconsider the vote was subsequently entered, leaving open the possibility that the legislation could return to the Senate floor.⁵

Whether the CLARITY Act ultimately passes or not, the broader direction of the market appears clear: crypto exchanges are increasingly expected to operate with the same standards of trust and risk management found in traditional financial services.

For crypto exchanges, that means identity verification and fraud mitigation are no longer just compliance functions. They are becoming increasingly important to long-term market participation.




Sources
1. U.S. Senate Committee on Banking, Housing, and Urban Affairs, “The CLARITY Act Delivers Regulatory Clarity for the Crypto Industry”
2. U.S. Senate Committee on Banking, Housing, and Urban Affairs, “The CLARITY Act Protects Everyday Americans”
3. U.S. News & World Report, “5 Big Brokers With New Crypto Offerings”
4. U.S. Senate, Roll Call Vote No. 234, H.R. 3633, September 15, 2026
5. U.S. Senate, Senate Floor Activity, September 15, 2026