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…