Amendment to the CLARITY Act Prohibiting Insider Trading in Crypto Assets Passed

On May 15, Senator Cynthia Lummis introduced an amendment during the Banking Committee review of the CLARITY Act, which requires the existing securities laws prohibiting insider trading to be applied to crypto assets, particularly ‘ancillary assets.’ Note: ‘Ancillary assets’ refer to a category of crypto assets defined in the bill that are related to securities but are not fully considered securities. Senator Warren opposed the amendment, stating that it only addresses surface issues, while the bill itself creates a larger loophole—many assets with characteristics of securities will not be classified as ‘ancillary assets’ and therefore will not be subject to insider trading rules at all. While I support combating all forms of insider trading, this fix is far from sufficient to address the problem, and it gives the public a false sense of security, leading them to believe they are safe from insider trading in the crypto space—when in fact, they are not. Insiders will still exploit loopholes. Therefore, I urge my colleagues to vote against it. The amendment was passed with 18 votes in favor and 6 against. The Cryptocurrency Market Structure Act (the CLARITY Act) is currently undergoing line-by-line voting and debate on the amendment.