So the protections stay what they are: at the federal level not law, but an interpretive notice sorting 16 tokens, a collateral pilot, a few no-action letters, a memorandum of understanding between two federal agencies, any of it revocable without a vote. The rest is left to the states, where investors get real protection in certain states, less elsewhere, and in some states none at all, none of it reaching a market that is national. The last great collapse already showed which protections hold and which give way.
When FTX failed, its offshore exchange misused its customers‘ assets for years. But several entities under the FTX umbrella — including LedgerX, a CFTC-regulated exchange and clearinghouse — came through the collapse whole, their customers’ assets segregated and intact. LedgerX survived for one reason: its protections were law. Not a clever mechanism but a plain one, customer segregation a regulator required and checked, which held whether or not anyone chose to honor it once the panic set in. The unregulated part of FTX ran on promises. In one collapse, under one roof, law held and promises broke.
FTX sat offshore for a reason. For years the United States met this industry with enforcement in place of rules, and its capital and talent went where the rules were clear, to Europe, Asia, and the Gulf. The rest went where there was no real oversight, and that is the gap an exchange like FTX grows in. When Washington started to offer clarity, the firms started returning to the U.S: Nexo came back after years away, London's Wintermute opened a New York office, and Switzerland's Taurus set up in New York to serve its bank clients. Law protects what it can reach, and the CLARITY Act would make that migration permanent instead of leaving the next firm to choose the dark. It would make the regulated, onshore model the norm for firms such as Bullish, a NYSE-listed digital asset market infrastructure firm (and the parent company of CoinDesk) already regulated in financial centres including Frankfurt, Hong Kong and New York, now pursuing CFTC registration as a designated contract market and derivatives clearing organization.