The Crypto Shell Game: How the “C.L.A.R.I.T.Y. Act” Masks Control as Freedom

The U.S. government slight of hand still has both of their dirty hands in your wallet

Sponsored by American Made Foundation

July 16, 2025

"The illusion of freedom will continue as long as it’s profitable to maintain the illusion."
—Frank Zappa

In Washington, “clarity” usually means the opposite. Case in point: the Clarity Act (H.R. 3633)—a bill sold as a breakthrough for the U.S. crypto industry—now moving through Congress with bipartisan fanfare. If passed, it would finally resolve the regulatory turf war between the SEC and CFTC and supposedly make America the "crypto capital of the world."

But behind the language of "freedom," "innovation," and "deregulation," the Clarity Act represents something far more insidious: a regulatory shell game, designed to move authority, not eliminate it—trading overreach for taxation, and ambiguity for surveillance.

The Sleight of Hand: SEC Out, IRS In

For years, the crypto industry has demanded an end to the SEC’s overreach. Lawsuits against Ripple (XRP), Coinbase, and others have highlighted how the lack of clear rules chilled innovation and forced American developers offshore.

Enter the Clarity Act: a 2025 bill that promises to:

• Hand most crypto oversight to the CFTC (instead of the SEC)

• Establish clearer classifications (e.g., “digital commodities” vs. “securities”)

• Create exemptions for “mature blockchains” to raise funds.

Sounds good—until you read the fine print.

This “reclassification” doesn’t reduce government control. It simply hands it off to other agencies that are:

• Easier for Wall Street to influence

• Perfectly positioned to enforce taxation and financial surveillance.

While the SEC may retreat from the battlefield, the IRS steps forward, armed with:

• Mandatory 1099-DA reporting from exchanges and brokers,

• Expanding taxable event definitions (airdrops, forks, staking),

• Cross-agency data sharing with FinCEN and the CFTC.

This isn't deregulation. It’s centralization with better branding.

XRP, Victory or Containment?

Social media influencers have been much a buzz about XRP as of late. Much was made of Ripple’s partial victory in court: XRP was ruled not to be a security when traded on secondary markets. But this didn’t free XRP—it domesticated it.

Under the Clarity Act:

• XRP may now be reclassified as a “digital commodity”

• Ripple still must comply with disclosures, exchange regulations, and new taxation standards

• And XRP holders remain fully within the IRS dragnet

What looked like a win was really just a jurisdictional pivot, not a liberation

The Shell Game Diagram: What’s Really Happening

Here's how the shell game works:

• The SEC takes a public beating for its enforcement-first approach

• The CFTC is brought in as the “pro-innovation” regulator

• But in doing so, the Clarity Act codifies a taxonomy that enables broad-based surveillance and taxation

• Behind both? The Treasury Department, IRS, and global financial institutions, who gain a predictable framework for controlling and taxing digital assets

This makes it easier to:

• Track every transaction

• Deny privacy by default

• Restrict self-custody wallets

• And drive capital into “compliant” platforms

Will This Push Crypto Offshore?

Almost certainly.

Already, we’re seeing:

• Developers moving to El Salvador, Panama, Dubai, and Portugal.

• Institutions quietly opening offshore branches to skirt U.S. rules.

• Retail users embracing VPNs, cold storage, and peer-to-peer privacy tools.

Why? Because while the U.S. promises “clarity,” it delivers traceability.

Even with a Trump win in 2024, unless he dismantles the tax-surveillance state embedded in the Clarity Act and adjacent laws, the U.S. will continue pushing real crypto underground or abroad.

What About Trump’s Plan to Make the U.S. the “Crypto Capital”?

Trump’s rhetoric is pro-crypto:

• He opposes CBDCs

• Embraces Bitcoin mining

• Promises to protect digital rights

But here’s the contradiction: his political allies are pushing legislation that cements the federal government’s grip on digital assets, not loosens it.

The Clarity Act is being cheered by people close to Trump. Yet the Act:

• Does not legalize true privacy

• Does not eliminate crypto taxation

• Does not protect self-custody

• And does not remove the government’s ability to freeze, track, or shut down wallets

This isn't about freedom—it's about compliant capital. It creates a "crypto-friendly" ecosystem for BlackRock, JPMorgan, and Fidelity—not the people.

The goal isn’t to kill crypto. It’s to domesticate it, regulate it, and ultimately absorb it into the financial system as a tool of state control.

What Real Crypto Freedom Looks Like

If Trump—or any serious candidate—wants to actually make the U.S. a crypto haven, they must:

1. Repeal the infrastructure bill’s 1099 crypto clauses.

2. Recognize privacy as a financial right.

3. Defund IRS weaponization against crypto holders.

4. Allow tax exemptions for non-custodial use and peer-to-peer trade.

5. Permanently block CBDC implementation.

Until then, legislation like the Clarity Act is not clarity—it’s camouflage.

My Final Thought

The U.S. isn't becoming the "crypto capital of the world."

It’s becoming the capital of surveilled, taxed, Wall Street-approved digital finance, where freedom is tolerated only within guardrails, and decentralization is permitted only when it doesn't threaten control.

Unless we break the illusion, the shell game will go on—and by the time the cup is lifted, your freedom will already be gone.

Coming Next: “Exit Strategies for the Crypto Underground: Privacy, Jurisdiction, and Survival in the Post-Clarity Act Era.”