We are living through a technological transformation as significant as the birth of the internet, and the decisions Washington makes now will determine who bears responsibility when that technology is used to cause harm. Right now, however, Congress is getting its bill to rein in crypto dangerously wrong.

The CLARITY Act, sponsored by lawmakers who say it is needed to give federal regulators clear jurisdiction over crypto markets that currently fall through the cracks between the SEC and the CFTC, would create a separate regulatory framework for cryptocurrency. The bill may be well-intentioned, but it is riddled with dangerous loopholes that can be exploited by bad actors. For example, even if the bill were to become law, Iran’s Revolutionary Guard could continue laundering funds through decentralized finance platforms, which run on code rather than traditional banking rails, to fund proxy militias. Cartels, meanwhile, could continue using the same platforms to obscure proceeds from narcotrafficking.

Think about it this way: When something goes wrong in a powerful automated system, should there be someone responsible, or is it OK to deliberately design a system where nobody bears the responsibility? Under the CLARITY Act, the more a crypto or artificial intelligence system spreads control across algorithms, token holders and automated contracts, the less accountable it becomes. Under such a law, distributing responsibility would stop being a technical choice and become a legal choice to ensure that when fraud happens, when sanctions are evaded, when markets are manipulated, nobody is left holding the bag.

In short, the bill creates exemptions from financial accountability for software developers and others involved in crypto-based financial systems, not based on what they do, but on how they’re organized. Under this proposed bill, if no single entity is formally and unilaterally “in control” — a structural gap North Korean state hackers currently exploit to move billions in stolen funds through decentralized platforms — then no one is accountable.

The bill would let bad actors off the hook with the excuse that their system is simply processing instructions from someone else. But that describes many financial institutions that are held accountable. For example, Visa and Mastercard never hold your money. They just route your transactions but they still screen for fraud and sanctions violations. Hawala networks don’t move physical money or have central vaults; they move money through entries in ledgers. Custody was never the sole trigger. Function was.