BitGo CEO Warns Clarity Act Failure Could Expose Markets to Risks Worse Than Lehman

Senate blocks Clarity Act, leaving crypto market gaps unaddressed

BitGo CEO Mike Belshe warned that the U.S. Senate's failure to advance the Clarity Act has left American capital markets exposed to serious structural risks. The Senate rejected a motion to proceed on the bill on September 15, falling short of the 60 votes needed.

Belshe made the comments during an interview with The Block at Korea Blockchain Week 2026. He said BitGo had supported the legislation and wanted it passed.

One-stop shops bring custody and credit risks

Belshe said firms are building so-called one-stop shops that combine exchange, brokerage, and custody functions for digital assets — all without the market structure needed to mitigate the risks. He pointed to Coinbase, which recently received a derivatives clearing organization license on top of its existing futures commission merchant license and exchange platform.

He identified two core risks in this model. The first is custody risk: unlike traditional exchanges, crypto custodians hold bearer assets where losing a private key means losing money permanently. The second is counterparty credit risk — the danger that one party in a trade cannot fulfill its obligations.

A Lehman-style collapse could be even more devastating

Belshe compared the one-stop-shop concentration to the 2008 collapse of Lehman Brothers, but argued the outcome could be far worse. Lehman failed because it could not see its own exposure, yet the financial system survived because Lehman was a bank, not the primary trading venue.

"Imagine if that had been the New York Stock Exchange offering those services and the whole New York Stock Exchange went down," Belshe said. "As devastating as the 2008 crisis was, we survived it. But if it had been New York's stock exchange going down, I don't know if we would have."

He added that a custody failure at a dominant exchange would not stay contained within the firm — "the entire market goes down."

What the interview confirmed

• The Senate rejected a motion to proceed on the Clarity Act on September 15, needing 60 votes to advance it.
• Coinbase received a derivatives clearing organization license in addition to its existing futures commission merchant license and exchange.
• BitGo has operated in crypto for 13 years and supported the Clarity Act.
• Belshe said banks and traditional firms are moving more slowly into crypto, partly because they fear a return of Operation Chokepoint 2.0, a term referring to alleged regulatory pressure on banks that do business with crypto companies.

AI agents and the role of stablecoins

Belshe also addressed a separate discussion at the conference. Maelstrom CIO Arthur Hayes argued that stablecoins — cryptocurrencies pegged to the value of a fiat currency like the U.S. dollar — cannot serve as a native currency for AI agents because they do not convert directly into compute power.

Belshe disagreed with the certainty of that claim. He said he does not expect AI "doomers" to be right about how soon humans lose control, and predicted that humans will interface with AI agents using dollar-based or other existing currency systems for the foreseeable future.

Why this matters for the crypto industry

Belshe's warning underscores a growing tension in the crypto space: as companies consolidate trading, brokerage, and custody services, there is no federal market structure in place to contain the fallout from a failure. The absence of clarity legislation means no legal framework has been established to address these systemic risks, leaving regulators and market participants to navigate the landscape without clear rules.

What happens next

It is unclear whether the Clarity Act will be reintroduced or revised. No timeline for further action was provided in the source material.

Sources

• The Block