CLARITY Act stalls after Coinbase CEO rejects crypto market structure bill

Coinbase (COIN) has withdrawn support for the Senate’s latest version of the CLARITY Act, casting doubt on the future of the long-awaited crypto bill.

Coinbase CEO Brian Armstrong said the revised draft would leave the industry worse off than the current regulatory system.

The CLARITY Act is designed to define how digital assets are regulated in the United States. It seeks to split oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Earlier versions were seen as a path toward clearer rules for exchanges, token issuers, stablecoins, and decentralized finance platforms. Decentralized finance, often called DeFi, refers to blockchain-based systems that let users trade or lend assets without traditional intermediaries like banks.

Armstrong said the current draft undermines those goals. He pointed to provisions that would effectively block tokenized stocks, expand data collection on DeFi users, and restrict rewards paid on stablecoins.

Tokenized stocks are digital versions of traditional shares that trade on blockchains. Supporters say they could lower costs and expand access to markets, while critics raise concerns about investor protection.

Armstrong also warned that limits on stablecoin rewards would favor large banks and reduce competition from crypto-based payment systems. Stablecoins are cryptocurrencies designed to hold a steady value, often by tracking the U.S. dollar.

Industry reaction has been divided. Ripple CEO Brad Garlinghouse called the draft a major step forward. The Digital Chamber and executives at Kraken signaled interest in revisions rather than rejection.

The response in Washington was swift. The Senate Banking Committee postponed its scheduled markup vote on the bill.

Committee Chair Tim Scott said key issues remained unresolved. He described the delay as an effort to preserve bipartisan talks, not abandon them.

Democratic support also remains uncertain. Ruben Gallego and other lawmakers have raised concerns about ethics and conflicts of interest.

With industry consensus breaking down and lawmakers divided, the CLARITY Act now faces an uncertain path forward.