In Washington this week, a bill that was supposed to give the U.S. crypto industry its long-promised rulebook instead turned into a very public brawl—after Coinbase abruptly yanked its support and effectively forced Senate lawmakers to hit pause.
The legislation at the center of the fight is the Digital Asset Market Clarity Act, often referred to as the CLARITY Act. In broad terms, it’s a “market structure” bill: it tries to define what kinds of digital assets fall under which regulator, and what platforms have to do to legally operate at scale in the U.S. The bill’s supporters—especially on the Senate Banking Committee—say it would pull trading venues, brokers, and other intermediaries into a tailored federal framework, strengthen disclosures and anti-fraud enforcement, and add guardrails aimed at illicit finance, while still leaving room for innovation. (Senate Committee on Banking)
But the pushback exploded when Coinbase CEO Brian Armstrong said the draft, as written, was “materially worse” than the current messy status quo. His core complaint wasn’t that Congress is regulating crypto—it was how the bill draws its lines. According to Armstrong and reporting on the draft, the provisions Coinbase objected to include language it says would amount to a de facto ban on tokenized equities, tighter constraints around DeFi, and measures it claims threaten financial privacy (the worry being broader access to customer financial records). He also argued the bill weakens the role the CFTC should have in overseeing crypto markets. (X (formerly Twitter))
The flashpoint, though, is stablecoin “rewards” or yield. Stablecoins have increasingly been marketed like cash-on-chain—easy to move, easy to trade, and sometimes paired with “earn” style rewards programs. The CLARITY Act debate has turned that feature into a political tug-of-war: crypto companies argue yield programs are a legitimate, competitive product, while many banks and banking groups see them as a direct threat to deposits. The bill’s current direction would restrict or prohibit paying interest-like returns simply for holding idle stablecoins—something Coinbase and parts of the industry say would “kill” stablecoin rewards. (Barron’s)
It’s not just a policy disagreement, it’s an industry power struggle. Crypto firms want a framework that legitimizes new rails—tokenized assets, on-chain market infrastructure, and consumer-facing yield products—while banks want to ensure “stablecoins that act like deposits” don’t siphon money out of the traditional system without deposit-style supervision. The result is a bill that’s being pulled in two directions at once, with crypto arguing the compromise is turning into a set of handcuffs.
The immediate consequence was political, not theoretical. The Senate Banking Committee had been preparing to move forward, but after Coinbase’s reversal the committee postponed its planned action—signaling lawmakers didn’t want to advance a “clarity” bill without buy-in from one of the largest U.S. exchanges. (Reuters)
Markets treated the drama as a speed bump, not a death sentence, but it still hit sentiment. Crypto prices dipped after the delay (Bitcoin hovering around the mid-$95,000 range), and Coinbase shares sold off sharply on the day the bill ran into trouble, before rebounding with broader market movement. (Barron’s)
Where this goes next is less about whether Congress passes a crypto bill and more about which coalition wins the drafting pen. Senate Democrats and committee leaders have signaled more talks with industry stakeholders, and there are parallel efforts in other committees that could reshape the final package. For now, the message from Coinbase and much of the crypto lobby is simple: they want “clarity,” but not if it comes bundled with restrictions they believe freeze the most lucrative and innovative parts of the market. (Investors.com)
