Former Secretary of Defense frames Clarity Act as national security imperative for crypto

A former Pentagon chief wants Congress to think about crypto regulation the way it thinks about fighter jets and foreign adversaries. Mark Esper, who served as Secretary of Defense under the Trump administration, published an op-ed in the Financial Times on August 7 arguing that the Digital Asset Market Clarity Act isn’t just a financial markets bill. It’s a national security one.

The argument is straightforward: countries like North Korea and China are increasingly exploiting digital assets for illicit purposes, and the US regulatory framework hasn’t kept pace. Esper’s proposed solution is passing the CLARITY Act (H.R. 3633), which would extend the Bank Secrecy Act’s anti-money-laundering and know-your-customer requirements to digital-commodity brokers while giving the Treasury Department enhanced authority to go after state-sponsored bad actors.

What the CLARITY Act actually does

The bill tackles one of crypto’s oldest regulatory headaches: who’s in charge. The CLARITY Act draws cleaner lines by sorting digital assets into three buckets. Securities stay under the SEC. Digital commodities fall to the CFTC. Stablecoins get handled separately under the GENIUS Act, which already passed.

Beyond the jurisdictional housekeeping, the bill adds teeth. It would bring Treasury’s Section 311 authority into play for digital assets, a tool historically used to cut off foreign banks and financial institutions from the US system when they’re tied to money laundering or terrorism financing.

The bill has already cleared significant legislative hurdles. The House passed it with a 294-134 vote in July 2025. The Senate Banking Committee advanced it with a bipartisan 15-9 vote in May 2026. Senate Majority Leader John Thune has filed cloture, setting up a procedural vote for September 15, 2026.

The national security framing

Esper isn’t exactly a disinterested observer here. He sits on Coinbase’s Global Advisory Council, which means he has a professional incentive to see clearer crypto regulations pass. But his national security argument carries weight independent of that affiliation, because the underlying threat is well-documented.

North Korea’s Lazarus Group has been linked to some of the largest crypto heists in history, funneling stolen digital assets into the regime’s weapons programs. China has used cryptocurrency to evade sanctions and finance espionage operations. The current regulatory patchwork makes it harder, not easier, for US authorities to track and disrupt these activities.

Esper’s core pitch is that keeping crypto activity onshore, under clear rules, gives US intelligence and law enforcement better visibility into financial flows than pushing it offshore to less regulated jurisdictions.

The timing of the op-ed matters. With a procedural vote six weeks away, Esper’s intervention reads as a strategic push to build momentum among senators who might view crypto regulation as a niche financial issue rather than something that belongs in the same conversation as defense spending and intelligence funding.

What markets are pricing in

Wall Street has been paying attention to the legislative calendar. When the Senate Banking Committee advanced the CLARITY Act in May 2026, crypto-exposed equities responded quickly. Coinbase stock jumped 9% in the days surrounding the vote. Other crypto-related equities saw gains in the 6-8% range.

One wrinkle worth watching: the CLARITY Act’s extension of BSA requirements to digital-commodity brokers could impose significant compliance costs on smaller exchanges and DeFi platforms, potentially consolidating the market around a handful of large, well-capitalized firms like Coinbase. Which makes Esper’s advocacy, however principled on national security grounds, conveniently aligned with the interests of his advisory client.