Key Takeaways:
- Coinbase says the CLARITY Act, as currently drafted, would leave the crypto market worse off than today.
- The bill has split the industry, with Ripple, Circle, and Kraken backing it, while Coinbase opposes it.
- Stablecoin rewards, DeFi privacy, and tokenized equities sit at the center of the dispute.
Coinbase CEO Brian Armstrong shook the crypto ecosystem this week by publicly withdrawing the company’s support for the Senate Banking Committee’s draft cryptocurrency regulatory bill known as the CLARITY Act.
According to Armstrong, the text reviewed over the past 48 hours contains “too many issues,” including a de facto ban on tokenized equities, prohibitions on decentralized finance that erode privacy rights, a weakening of Commodity Futures Trading Commission authority in favor of the SEC, and restrictions on stablecoin reward programs that could benefit incumbent banks at the expense of innovators.
As BanklessTimes previously reported, Coinbase told U.S. senators it could reconsider its support if the bill curtails yield programs for stablecoin holders, such as USDC, beyond basic transparency and disclosure requirements.
Industry Reaction Splits, But Support Grows Beyond Coinbase
In stark contrast to Coinbase’s stance, Ripple CEO Brad Garlinghouse welcomed the market structure bill as a “massive step forward” toward workable regulatory frameworks that protect consumers without stifling innovation. Garlinghouse said Ripple remains “at the table” and optimistic that issues can be resolved through the markup process.
Multiple leading crypto firms and industry associations quickly followed, publicly endorsing the Senate GOP’s approach to clear regulatory guardrails.
Backers consist of venture capital firms like a16z, stablecoin provider Circle, the exchange Kraken, the Digital Chamber of Commerce, Ripple itself, and the advocacy organization Coin Center. This backing indicates that, although Coinbase concentrates its criticism on certain aspects, a larger portion of the ecosystem recognizes the importance of establishing jurisdictional clarity between the SEC and the CFTC.
CLARITY Act’s Intent vs. Criticism From Crypto Firms
Unveiled January 13 by the US Senate Banking Committee GOP, the CLARITY Act seeks to align digital asset oversight with traditional securities and commodities law. Its Republican sponsors argue the bill replaces fragmented regulation with clear, enforceable protections, allocating securities-like tokens to the SEC authority and commodities to the CFTC, while strengthening anti–money laundering rules.
Proponents insist the bill would reduce legal uncertainty that currently drives capital overseas and leaves investors exposed. However, critics, led by Coinbase, argue that, in its current form, the legislation may “favor big banks and regulators” over decentralized innovation, hamper DeFi’s privacy protections, and inadvertently restrict consumer options for yield generation.
With over 130 amendments anticipated and Thursday’s markup approaching, the bill’s fate remains uncertain. Still, the public split between Coinbase and other industry heavyweights has elevated the stakes for policymakers and markets alike.
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