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Crypto regulation rarely gets framed as a matter of war and peace. But when a former US Secretary of Defense takes to the Financial Times to argue that passing a digital asset bill is urgent for national security, it signals that the debate in Washington has shifted well beyond market structure and investor protection.
Mark Esper, who led the Pentagon under President Donald Trump, published an op-ed on Saturday urging the Senate to pass the CLARITY Act before its expected floor vote on September 15. Senate Majority Leader John Thune filed cloture on Saturday to bring the bill forward for consideration. Esper’s argument was direct: unclear digital asset rules do not just harm American competitiveness, they create exploitable gaps for adversaries.
China, North Korea, and the Dollar’s Slow Erosion
Esper’s case rests on two distinct threats. The first is China. He wrote that Beijing is already building state-directed payment systems designed to route around American financial oversight and chip away at the US dollar’s role as the world’s reserve currency. “I have long argued that China is the greatest strategic threat of our lifetime,” Esper said in the piece, a view he has held consistently since his time in government.
The second threat is more operational. Esper pointed to North Korean actors, specifically the Lazarus Group, as active exploiters of crypto-specific loopholes that allow them to move funds outside the reach of US financial controls. The Lazarus Group has been linked by US authorities and blockchain analytics firms to some of the largest crypto thefts in history, using decentralised infrastructure to launder proceeds and fund Pyongyang’s weapons programs.
His proposed remedy is the CLARITY Act’s extension of Treasury’s special-measures authority under Section 311 of the USA Patriot Act. That provision allows the Treasury to designate foreign financial institutions or jurisdictions as primary money laundering concerns, effectively cutting them off from the US financial system. Esper described it as “one of our sharpest weapons against rogue actors” and argued the Act would bring that weapon to bear on crypto channels that currently sit outside its reach.
The Coinbase Connection and Why It Matters for the Argument
Esper’s op-ed carries weight because of his biography, though it also carries a caveat worth noting. He currently serves as a member of the Coinbase Global Advisory Council, meaning he has a professional relationship with one of the largest US crypto exchanges and a company that has lobbied heavily for regulatory clarity in Washington. Readers should weigh that context when assessing how he frames the bill’s benefits.
That said, the national security logic he advances is not unique to the crypto industry’s preferred narrative. US intelligence officials, Treasury analysts, and independent researchers have separately documented North Korea’s use of crypto to evade sanctions, and China’s digital yuan project is a genuine strategic initiative rather than a hypothetical concern. Esper is amplifying a real debate, even if his institutional position gives him reason to advocate for a particular legislative outcome.
“This is why the Clarity Act, now before the Senate, is not merely a financial services bill. It is also a national security bill, and it should be understood as such and passed with urgency,” he wrote.
What This Means Beyond Washington
For readers in Malaysia and Singapore, the framing of the CLARITY Act as a national security instrument rather than a routine financial regulation carries practical implications. Both countries sit within a region where China’s financial influence is substantial and where digital asset activity is significant. If the US passes clearer crypto rules tied explicitly to sanctions enforcement and dollar-system protection, regional exchanges and financial institutions will face sharper compliance expectations when handling transactions that touch the US financial system.
Singapore’s MAS has already built one of the more rigorous crypto licensing frameworks in Asia, partly in anticipation of exactly this kind of pressure from Western regulators. Malaysia’s Securities Commission has been more cautious, but the direction of travel globally is toward tighter controls rather than looser ones. A US framework that extends Patriot Act-style measures into crypto would raise the compliance bar for any institution with US dollar exposure, which in practice means most significant players in the region.
The broader point Esper is making, that digital asset regulation is inseparable from geopolitical competition over financial infrastructure, is one that policymakers in Kuala Lumpur and Singapore will need to take seriously regardless of how the Senate vote goes on September 15. The question is no longer whether crypto intersects with national security. It is which country’s regulatory framework sets the terms for everyone else.
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