Key Insights
- The CLARITY Act remains under negotiation with a delay in the markup by the Senate Banking Committee.
- Coinbase withdrew its support, citing the market structure and regulations surrounding stablecoins.
- It has not been allocated another date, and the situation of the bill in the Senate is unclear as well.
The CLARITY Act is pending legislation in the U.S. Senate this week, with the Senate Banking Committee postponing a planned markup, amid renewed public concern over the draft text and Coinbase dropping its support. The committee had planned to meet on Thursday to consider revisions to the Digital Asset Market Structure Bill.
Senate Banking Committee Stalls Markup of CLARITY Act amid Discussions
The Senate Banking Committee Chairman Tim Scott stated that the committee would not conduct its planned markup. He further indicated that the Democrats and Republicans were still negotiating, although he did not provide a specific date for when the meeting would be rescheduled.
The postponed meeting was intended to consider the Senate version of the CLARITY Act, a bill that aims to regulate cryptocurrency assets in the United States.
The bill will explain the classification of tokens and leave supervision of the spot market to the Commodity Futures Trading Commission, while retaining the responsibility for disclosure and enforcement with the Securities and Exchange Commission.
Coinbase Breaks Support as Armstrong Raises Red Flag on Token and Stablecoin Issues.
The postponement followed remarks by Brian Armstrong, the chief executive of Coinbase, who wrote that the company could not endorse the Senate draft in its current form.
Armstrong posted on X that his team had reviewed the text for more than 48 hours and identified several provisions that they found problematic.
https://twitter.com/brian_armstrong/status/2011545247105355865
According to Armstrong, the draft introduced a de facto ban on tokenised equities and imposed restrictions affecting decentralised finance and privacy tools. It included changes that could weaken the authority of the Commodity Futures Trading Commission.
He also warned that those changes could shift influence toward the Securities and Exchange Commission in ways that affect innovation.
Armstrong added that the bill’s provisions related to stablecoins were among the most contentious. He said limits on rewards tied to stablecoins could disrupt existing business models and deepen tensions between banks and crypto firms over how such incentives should be treated under federal law.
Stablecoin rewards become a central fault line
Under the current Senate draft of the CLARITY Act, crypto firms would be prohibited from paying consumers interest solely for holding a stablecoin.
However, the bill would still allow certain reward programs linked to activities such as payments or loyalty participation.
Additionally, disclosure requirements for those programs would be developed jointly by the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Coinbase’s objections placed additional pressure on lawmakers as they weigh how to balance consumer protections with market functionality under the CLARITY Act framework.
Galaxy raises concerns over the illicit finance authority
Separately, digital asset firm Galaxy issued its own warning about the Senate Banking Committee draft.
The company stated that the Senate version extends beyond the House-passed Digital Asset Market Clarity Act in its provisions related to illicit finance.
Galaxy cautioned that the bill could expand the Treasury Department’s authority over crypto transfers through a new “special measures” power.
According to the firm, this authority could allow Treasury to target jurisdictions, institutions, or transaction categories deemed to pose primary money laundering concerns.
Galaxy compared the proposed power to tools created after the September 11 attacks under the Patriot Act, noting that such measures could be applied broadly across offshore platforms and transaction rails if enacted as written.
Lawmakers and industry figures respond to the delay
The new discussion of the CLARITY Act follows as the Donald Trump administration expresses a more permissive stance towards the digital asset industry.
According to Ryan Rasmussen, head of research at Bitwise Invest, the existing Senate bill poses a threat to tokenisation, the existence of stablecoins, decentralised finance, privacy, and wider market participation.
Cryptocurrency lawyer Jake Chervinsky also cited such issues, arguing that the markup procedure and subsequent floor discussion might still entail significant modifications to the text.
Venture capitalist Tim Draper publicly sided with Armstrong, saying that the Senate compromise, as written, was worse than nonexistent.
