Ex-Defense Secretary Esper Calls CLARITY Act National Security Bill

Mark Esper, the former U.S. Defense Secretary, has called the CLARITY Act a “national security bill” rather than just a financial‑services measure. The legislation, introduced in the House in 2023, would require cryptocurrency exchanges to provide the Treasury Department with detailed customer information, including identity and transaction data, to improve tax enforcement and prevent illicit activity. Esper’s comment comes as the bill moves through committees and faces a hearing before the full House.

The push for CLARITY comes amid growing concern that the anonymity of crypto transactions fuels money laundering, tax evasion, and even terrorism financing. According to the Treasury’s 2023 report, the U.S. lost roughly $3.3 billion in tax revenue from unreported crypto gains. The bill would close that loophole by mandating “Know‑Your‑Customer” (KYC) and “Anti‑Money Laundering” (AML) compliance for every exchange operating in the United States. It has bipartisan support, with Rep. Mike Gallagher and Sen. Ron Johnson championing it as a way to level the playing field for traditional financial services and protect national security interests.

Esper, who has worked in cybersecurity after leaving the Pentagon, said the bill’s focus on data transparency is key to detecting and disrupting criminal networks that use crypto to move funds across borders. Industry groups such as the Blockchain Association argue that the requirements would impose heavy costs on small exchanges and could drive users to offshore platforms. Yet the Treasury has estimated that full compliance could recover up to $1.2 billion in lost tax revenue over the next decade. The bill’s proponents claim it would also give law‑enforcement agencies a vital tool to track the flow of illicit funds.

The next step for the CLARITY Act is a House vote, with a Senate hearing scheduled for later this year. Esper is slated to testify before the House Committee on Financial Services, where he will likely expand on how the bill aligns with national security priorities. If passed, the Act would force crypto exchanges to submit customer data to the IRS within 30 days of account creation, a move that could reshape the industry’s regulatory landscape and strengthen the United States’ ability to counter financial threats.