The Digital Asset Market Clarity Act (H.R. 3633) a major U.S. digital asset legislative proposal that divides regulatory power between the SEC and CFTC, while sparking intense debates over privacy, developer liability, and anti-money laundering (AML) enforcement has been effectively shelved in the U.S. Senate ahead of the August recess, until September delayed by a crowded legislative agenda, alongside opposition from a bloc of Democratic senators over ethics terms.

Senate Republicans released an updated 616-page text of the Digital Asset Market Clarity Act (H.R. 3633), which merges Senate Banking and Agriculture Committees’ texts into a single framework. [A bill text and a section-by-section summary are also available].  The bill assigns spot market authority over “digital commodities” to the CFTC and investment contract assets to the SEC.  And seeks to protect software/blockchain developers and decentralized networks that do not hold customer assets from illicit liability. 

The new draft includes a White House-backed ethics title barring covered federal officials and their spouses from issuing or sponsoring digital assets during public service, law enforcement stablecoin seizure powers, and temporary bans on digital asset issuance by federal officials through January 20, 2029.  Enforcement actions under the updated ethics title are restricted exclusively to the Attorney General, excluding state attorneys general or private parties.  

Lawmakers remain divided over the Digital Asset Market Clarity Act (CLARITY Act), specifically concerning ethics enforcement authority, anti-money laundering scope for decentralized finance (DeFi), and federal powers over privacy tools.

Disagreements exist over whether the U.S. Department of Justice or state attorneys general should enforce bans preventing federal officials from issuing or sponsoring digital assets. Critics argue the proposed bans leave passive crypto investments and prior revenue streams untouched.  Proposed text includes fines up to $250,000 per day for violators, which critics view as insufficient. 

Major banking groups warn the CLARITY Act leaves critical anti-money laundering gaps inviting illicit finance risks and threaten traditional financial safeguards. Critics argue it excludes decentralized entities from Bank Secrecy Act rules and lacks clear authority to target transaction mixers.  The bill does not apply traditional bank rules to many unhosted wallets and decentralized finance networks with Federal agencies lacking direct statutory power to restrict or track transaction mixers under the current text.  

Major financial institutions including BlackRock, Fidelity, Franklin Templeton, Goldman Sachs, and SoFi publicly urged passage of the bill.  On July 24, the Fraternal Order of Police wrote a letter supporting the Clarity Act, reversing an April letter opposing the bill over provisions of the Blockchain Regulatory Certainty Act, which would protect certain developers and firms that do not control customer assets from prosecution for illicit activity conducted by others on the platforms they build.  Nevertheless, a group of seven Senate Democrats expressed that the updated ethics safeguards and stablecoin rules remain insufficient, stalling the 60-vote threshold needed to clear the floor before the summer break. A vote on the Clarity Act could be pushed to September 2026, though its final passage remains uncertain due to ongoing political debates and a crowded legislative calendar ahead of the midterm elections.

William Quigley, a cryptocurrency and blockchain investor and co-founder of WAX and Tether, said “There are three things I am focused on with respect to the Clarity Act:

1. Stablecoin Activity Based Rewards & Temporarily Freezing Accounts:   The two main friction points in the Clarity Act have been Section 404 (stablecoin activity based rewards) and Section 304 (temporarily freezing accounts and indemnification for doing so). These are mostly resolved at the legislative level. But there will be a lot of drama over these provisions as the responsible federal regulators draft specific rules and guidance to industry participants.

2. What Counts as Activity Based Rewards: Congress is giving the Treasury, SEC and CFTC a year post Clarity Act enactment to jointly define what counts as an activity based reward. The banking and crypto industry will be deeply involved in helping shape the definitions in their favor.


3. Stable Coin Yield:   Coinbase seems confident it has a work around to the prohibition in stablecoin yield. But investors should be wary of financial products marketed as passive yield earning investments. Activity based rewards are not in any way the same as the passive yield a customer earns in a savings account.”

At the Securities Exchange Commission (SEC), Commissioner Hester Peirce views payment stablecoins as essential tools for blockchain transactions, supporting a practical 2% net capital haircut for broker-dealers and warning that yield-generating on-chain activities remain bound by securities laws. 

He states that payment stablecoins are necessary for transacting on blockchain rails and expanding tokenized asset business. He applauded SEC staff guidance allowing a reduced 2% haircut instead of punitive 100% requirements, aligning stablecoins with money market funds. Warning that moving traditional financial services like lending or yield vaults onto blockchain rails does not exempt them from federal securities regulations. 

The People’s Bank of China already made its central bank digital currency (the digital yuan or e-CNY) interest-bearing starting January 1, 2026, while simultaneously banning private yuan-pegged stablecoins.  Yifan He, CEO of Red Date Technology and architect of China’s Blockchain-based Service Network (BSN), in an interview published by Irish Tech News on May 15, 2026 stated that he regards stablecoins as practical payment tools if properly regulated. While not a proponent of decentralized yield-farming or crypto-earning protocols, he acknowledges that stablecoins serve a functional purpose for enterprise settlement, fast payments, and international transactions when managed inside compliant frameworks for digital currency integration. He maintains that mainstream blockchain evolution relies on regulated, institutional implementation rather than decentralized retail yield-chasing. 

About the Author:

Selva Ozelli Esq, CPA, is an international digital asset legal expert and author of Sustainably Investing in Digital Assets Globally.  Her writings are translated into 45 languages and republished in over 200 global publications.  She is recognized as an expert media/TV commentator on global digital asset regulation, tax, and technology matters.

Exchanges advertise leverage the way carriers advertise data speeds, as a capability offered for your benefit. The arithmetic says something else. A venue earns on notional, so the slider that multiplies your position multiplies its revenue identically while collapsing your survival odds, and the deleveraging queue ranks you first for forced closure because the venue knows exactly which accounts are fragile.

Open any major derivatives venue and the leverage control is presented as a capability. A slider, a dropdown, a set of preset multipliers running from 2 times up to 100 or beyond, framed in the marketing as capital efficiency and in the tooltips as a tool for experienced traders. The framing is not false. Leverage is a legitimate instrument; professionals use it, and its existence is not evidence of bad faith.

But the framing omits an arithmetic relationship that determines almost everything about outcomes on these platforms, and the omission is not random: a venue earning fees on notional value collects more from a leveraged position than from an unleveraged one funded with identical collateral, while the leveraged position is substantially likelier to be liquidated. The interests are not aligned; the misalignment is mechanical, not conspiratorial, and it is visible to anyone who does the multiplication. This guide does the multiplication.

The fee arithmetic

Start with how trading fees are actually assessed, because this is the fact the whole argument rests on and it is not hidden anywhere.

Fees on derivatives venues are charged as a percentage of notional value, which is the full size of the position, not the margin posted to open it. A trader depositing $1,000 and opening an unleveraged position pays fees on $1,000 of notional. The same trader using 50 times leverage opens a $50,000 position and pays fees on $50,000 of notional, from the same deposit.

Fee rates vary by venue and by whether an order adds or removes liquidity, but the structure is uniform: the multiplier applied to the position is applied identically to the fee. At a taker rate of a few basis points, a round trip on a $50,000 notional position costs a meaningful fraction of a $1,000 deposit before the market has moved at all.

The same multiplication applies to funding. In perpetual futures, the periodic payment flowing between longs and shorts is calculated on notional, a detail one major wallet provider’s documentation flags explicitly as mattering for true holding costs. A leveraged position pays leveraged funding, so a persistently crowded side becomes expensive at a rate proportional to the multiplier chosen.

Nothing here is concealed. It is in every fee schedule. What is rarely stated in the same place is the consequence: for the venue, the leverage slider is a revenue multiplier applied to the same customer deposit, and its effect on revenue is linear and certain while its effect on the trader’s outcome is negative and probabilistic.

What leverage does to survival

Now the other side of the same multiplication, stated as plainly as the fee side.

Leverage compresses the distance between your entry price and the point at which your collateral no longer supports the position. At 10 times, roughly a 10% adverse move exhausts the margin. At 25 times, roughly 4%. At 50 times, roughly 2%. At 100 times, the margin for error falls below 1%, and one industry glossary states the position bluntly: a 1% market movement can result in a total loss of capital.

Those figures are approximations before fees, funding, and maintenance-margin buffers, all of which move the liquidation point closer, not further. They also assume the reference price behaves smoothly, which in stressed conditions it does not.

Set that against how crypto actually trades. 2% intraday moves are routine, occurring on most assets multiple times in a typical week and repeatedly within single days during volatility. A 50-times position is therefore not a bet on direction; it is a bet that ordinary noise does not arrive before your thesis plays out, and ordinary noise arrives constantly. Being correct about direction and wrong about sequence produces the same result as being wrong about everything.

One further asymmetry deserves stating. Stop-loss orders do not reliably protect high-leverage positions, because in fast markets the gap between the trigger and the fill can exceed the entire remaining margin. The tool most often recommended alongside leverage is least effective at exactly the leverage levels where it is most needed.

The deleveraging queue ranks you

Here is the element almost nobody connects to the rest, and it is the clearest evidence that venues understand the relationship perfectly.

When a liquidation cannot be cleared in the market, and a venue’s backstop fund or protocol vault is exhausted, the exchange reduces positions on the profitable side to keep its books balanced. That mechanism is auto-deleveraging, and this publication covers it in detail in a dedicated guide. The relevant point here is how the venue chooses whose positions to close.

Selection is formulaic and published. Venues rank candidates by a combination of unrealised profit and effective leverage, closing the most profitable and most leveraged positions first, and many display each trader’s rank as a live indicator on the interface.

Read that ranking as what it is: the venue’s own statement about which accounts are fragile. An exchange that sorts by leverage when deciding whose winning positions to terminate has encoded, in its risk engine, the judgment that high leverage marks a position as expendable. The marketing presents the slider as a feature. The risk engine treats the same setting as a liability marker.

The practical consequence is that leverage costs you twice on the same position: it shortens the distance to liquidation when you are losing, and it raises your rank for forced closure when you are winning.

Why the slider exists at all

The uncharitable reading is that venues offer extreme leverage to harvest fees from accounts that will not survive. The charitable reading is that leverage is a legitimate tool and competitive pressure forces every venue to match the maximum its rivals advertise. Both are partly true, and the second explains the escalation better than the first.

Maximum leverage functions as a marketing number in this industry the way megapixels once did in cameras. It appears in comparison tables, it differentiates venues that are otherwise similar, and no exchange wants to be the one advertising a lower ceiling. That dynamic ratchets upward regardless of whether anyone believes high leverage serves customers, which is why the figures have climbed steadily while the arithmetic behind them has not changed.

It is worth noting who does not permit this. Most regulatory regimes restrict or prohibit extreme leverage for retail participants in traditional markets, and that restriction was not arrived at casually. Retail leverage limits exist because supervisors examined outcome data and concluded the products were unsuitable at those levels. Crypto venues operating outside those perimeters are not evading a rule so much as operating where the rule was never written.

What experienced traders actually do

The gap between advertised maximums and professional practice is the most useful thing a new participant can know.

Professionals use leverage, and they use far less of it than platforms permit. The reason is not caution as a personality trait; it is that position sizing is the variable with the largest effect on long-run outcomes, and high leverage removes the ability to be early. A trader with a correct thesis and low leverage survives being wrong about timing. The same trader at 50 times does not, and being right eventually is worth nothing once the position is closed.

The second practice is treating leverage as a cost input instead of a capability. Before entering, calculate the fee on the intended notional, add the expected funding over the intended holding period, and compare that total against the edge the trade is supposed to capture. Strategies that require high leverage to be worth executing are strategies whose edge is too small to survive their own costs, and the calculation reveals it in under a minute.

The third is watching the deleveraging indicator where a venue provides one. A rising rank during a favourable move is the venue telling you, in advance, that it considers your position a candidate for termination.

The honest use cases

None of this argues that leverage should never be used, and a guide that concluded otherwise would be ignoring why the instrument exists.

Hedging: A holder with substantial spot exposure can use a small leveraged short to reduce net risk without selling the underlying. Here leverage is capital efficiency in the genuine sense: the alternative is tying up equivalent capital to achieve the same protection.

Defined-risk short-term positions: A trader with a specific thesis, a predetermined invalidation point, and a position sized so that reaching that point costs an acceptable fraction of capital is using leverage as intended, and the leverage figure is an output of the sizing, not an input.

Capital efficiency for market makers: Professionals quoting both sides need leverage to run inventory without locking up disproportionate collateral, and their risk is managed through hedging, not through directional conviction.

What connects all three is that the leverage number falls out of the risk decision rather than driving it. The failure mode the interface encourages is the reverse: choosing a multiplier first, sizing to it, and discovering the risk afterwards.

The summary worth carrying is that everything in this guide is disclosed. Fee schedules state that fees apply to notional. Documentation states that funding applies to notional. Deleveraging pages state the ranking formula. Risk warnings state that a 1% move can end a 100-times position. What no venue publishes is the paragraph connecting them, because the connection is that the setting generating the most revenue is the setting most likely to end the account generating it.

The traditional-market comparison

The clearest way to see how unusual crypto leverage is comes from looking at what other markets permit, because the limits elsewhere were set deliberately after examining outcomes.

Retail participants in most regulated markets face leverage caps well below what crypto venues advertise, and the caps exist because supervisors studied client outcome data and concluded that higher levels produced consistent losses across the retail population. The details vary by jurisdiction and instrument, and the direction is uniform: where a regulator has examined retail leverage empirically, the response has been to restrict it. Crypto venues offering multiples several times higher are not evading those rules so much as operating in a space where the rules were never written.

There is a second structural difference worth naming. Regulated futures markets sit behind a clearinghouse with a layered default waterfall: the defaulting member’s margin, then their guaranty fund contribution, then the clearinghouse’s own capital, then mutualised contributions from surviving members. Losses reach ordinary participants only after several institutional layers absorb them, which is why retail futures traders essentially never experience anything resembling auto-deleveraging.

Crypto venues compressed that structure into a single insurance fund or protocol vault. The compression is what makes leverage instantly available to anyone with a wallet, and it is also why the loss-allocation mechanism reaches ordinary traders in conditions where a traditional market would never expose them.

Neither design is simply better: one buys accessibility with tail risk, the other buys insulation with cost and gatekeeping. But a trader comparing a crypto venue’s 100-times offering to a regulated broker’s much lower cap should understand that the difference reflects a deliberate judgment somewhere, and it is not the venue offering the higher number that made it.

A closing note on the one number that would settle this debate and that no venue publishes.

Every exchange knows, precisely, what percentage of accounts using each leverage tier are profitable over a given period. The data sits in their systems; it requires no research to produce, and it would answer the question this guide approaches through arithmetic: whether high leverage works for the people using it. Some regulated brokers in other markets are required to disclose exactly that figure, and where they do, the published numbers have been consistently unflattering.

No major crypto derivatives venue publishes it voluntarily. That absence is not proof of anything, and there are defensible reasons a venue might not want to advertise client outcome statistics, including that the figure varies enormously with how it is defined. But the absence is conspicuous in a sector that publishes volume, open interest, insurance fund balances, liquidation feeds, and deleveraging rankings in real time.

A venue willing to show you your own position in the deleveraging queue is a venue with the data infrastructure to show you the survival rate at your chosen leverage tier, and it does not.

Until someone does, the honest position for a trader is the one the arithmetic supports: leverage is a cost multiplier with certain effect and a return multiplier with probabilistic effect, the venue collects the first regardless of the second, and the setting that generates the most revenue is the setting the venue’s own risk engine flags as most fragile. That is enough to size positions by, without needing anyone’s disclosure.

Frequently Asked Questions

Disclaimer: This article is for information and educational purposes only and does not constitute financial or investment advice. Leveraged derivatives trading carries substantial risk of loss, including total loss of collateral; fee structures and mechanisms vary by venue, and products described may be restricted in your jurisdiction. Always do your own research. Information is accurate as of July 29, 2026.

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