The CLARITY Act Has A Provision Nobody's Talking About - Here's What's New In The Bill

The CLARITY Act placed crypto exchanges, DeFi platforms, and crypto ATMs under existing AML and sanctions regulations, according to Senator Cynthia Lummis.

• The updated CLARITY Act closes the “DINO” loophole, targeting crypto platforms claiming to be decentralized but still holding operational control.
• A little-known provision protects self-custodied crypto from being considered abandoned property just because a wallet goes unused.
• The legislation could help firms like Coinbase and Circle by providing more clarity from the federal government on digital assets and stablecoins.

The revised Digital Asset Market Clarity Act (CLARITY Act) does more than establish market structure rules for crypto; it goes after platforms that claim to be decentralized, and for the first time, provides federal legal protections for self-custodied digital assets sitting in inactive wallets.

The bill closed the “DINO loophole,” short for Decentralized In Name Only, that has allowed crypto exchanges, decentralized finance (DeFi) platforms and crypto ATMs to claim decentralization to avoid anti-money laundering rules and sanctions, even when operators had control, Senator Cynthia Lummis (R-WY) said on Saturday.

The bill “brought every corner of the digital asset market inside the Bank Secrecy Act and sanctions framework,” Lummis said, noting platforms “won’t hide from the law anymore.”

Self-Custody Shield

Separately, Alex Thorn, Head of Research at Galaxy Digital (GLXY), pointed to a provision in the bill that he said most people have missed.

He referred to section 20216 of the CLARITY Act, which stated that any inactivity, dormancy, or lack of indication of interest by the owner of a digital asset lawfully held in self-custody shall not be deemed to be grounds for the digital asset to be considered abandoned, unclaimed, or subject to forfeiture under any Federal, State, or local law. 

The provision provided for federal preemption, meaning it trumped any state law that would have classified a self-custodied digital asset as abandoned because of inactivity.

Thorn called it a “great section,” saying the provision protected long-term holders from having their crypto seized under state escheat or abandoned property laws when a wallet hasn’t moved funds.

Why It Matters Now

The self-custody provision came as BitMart (BMX) became the third centralized exchange to announce a shutdown this month after AscendEX (ASD) and BitMEX (BMEX). So far in 2026, more than 30 crypto projects have shut down.

The provisions come as the CLARITY Act heads for a potential vote on the Senate floor next week. Goldman Sachs (GS) CEO David Solomon backed the bill while Coinbase (COIN) CEO Brian Armstrong called it at the "one-yard line" of passage earlier in the week.

What It Means For Circle And Coinbase

If the bill passed, Circle (CRCL) and Coinbase (COIN) could both benefit, with Circle gaining a federal stablecoin framework for its USD Coin (USDC) and Coinbase gaining clearer jurisdiction rules that would allow it to list more digital assets with regulatory certainty. 

CRCL stock closed up by 0.29% on Friday. On Stocktwits, the retail sentiment around CRCL remained in the ‘bearish’ zone, while chatter around it stayed at ‘low’ levels over the past day. Whereas COIN stock closed down over 1% on Friday. On Stocktwits, the retail sentiment around COIN remained in the ‘bullish’ zone, while chatter around it stayed at ‘normal’ levels over the past day.

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