CLARITY Act Could Bring Crypto Trading Back Onshore, Says Bill Hughes

The Digital Asset Market Clarity Act, or CLARITY Act, could help reverse years of crypto trading migration to offshore exchanges by creating a clearer regulatory framework for digital asset markets in the United States, according to lawyer and crypto policy commentator Bill Hughes.

In a lengthy post on X on Friday, Hughes argued that the U.S. remains the world’s largest cryptocurrency market by fiat inflows and transaction activity, yet much of the trading volume continues to occur on exchanges based outside American jurisdiction. He said the proposed legislation would create a legal structure for digital commodity exchanges, brokers, dealers, and intermediaries operating in U.S. markets.

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The comments come as lawmakers continue debating how to establish federal rules for crypto market structure, stablecoins, and digital asset oversight.

Offshore exchanges dominate crypto trading

Hughes said American users moved more than $1 trillion in crypto transactions during the first seven months of 2025, citing industry reports from Chainalysis and TRM Labs. Despite that scale, he noted that much of the global spot and derivatives activity remains concentrated on offshore platforms.

According to Hughes, offshore exchange activity grew partly because companies found it easier to operate outside the United States during years of regulatory uncertainty and enforcement-focused oversight.

He pointed to market share data showing offshore exchanges, including Binance, OKX, Bybit, and Bitget, accounting for a large portion of global crypto trading volume, particularly in perpetual futures markets where U.S.-regulated competitors remain limited.

CLARITY Act would expand federal oversight

Hughes argued the CLARITY Act would establish a broader federal framework for digital asset trading platforms while extending anti-money laundering and sanctions compliance requirements to covered entities.

He said the bill would increase Treasury Department and FinCEN visibility into crypto activity through Bank Secrecy Act obligations, transaction monitoring requirements, and information-sharing mechanisms between regulators and private firms. The proposal also includes provisions tied to illicit finance enforcement, sanctions compliance, and oversight of certain non-decentralized trading protocols and crypto kiosks.

Hughes framed the legislation as both a financial competitiveness issue and a national security matter, arguing that offshore platforms have increasingly been used in transactions tied to sanctioned jurisdictions and illicit finance networks.

Wall Street firms awaiting clearer rules

The post also highlighted growing institutional interest in blockchain-based financial infrastructure. Hughes said banks, exchanges, asset managers, and payment companies are exploring blockchain rails for faster settlement, lower operational costs, and programmable compliance systems. However, he argued that many firms remain hesitant to scale adoption without clearer legal guidance from Congress.

According to Hughes, the end of what the industry often described as “regulation by enforcement” removed one barrier, but institutional firms still require statutory clarity before committing significant resources to blockchain-based operations.

Senate timeline remains uncertain

The CLARITY Act passed the U.S. House in July 2025 with bipartisan support, but the measure still faces hurdles in the Senate. Hughes warned that the legislative window may narrow significantly after the August recess as attention shifts toward the 2026 midterm election cycle. He also referenced comments from Cynthia Lummis, who has said failure to pass crypto market structure legislation this year could delay progress for several more years.

Hughes added that public polling released this week showed majority support for the legislation among both Republican and Democratic voters, arguing that lawmakers may face growing pressure to advance the bill.

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