CLARITY Act Stalled: How Coinbase's Revolt Against U.S. Crypto Rules Could Freeze the Crypto Market (2026 Update)

By: WEEX|2026/01/27 05:00:00
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CLARITY Act Stalled: How Coinbase's Revolt Against U.S. Crypto Rules Could Freeze the Crypto Market (2026 Update)

In January 2026, a single sentence buried in a 278-page Senate draft sparked a revolt: ‘No yield on stablecoins.’ Within days, Coinbase CEO Brian Armstrong publicly killed the bill — and with it, the crypto industry’s best shot at U.S. regulatory clarity. Here’s what went wrong.

At the center of attention is a single U.S. bill — the Digital Asset Market Clarity Act of 2025, better known as the CLARITY Act. For years, American crypto regulation had been defined by uncertainty, lawsuits, and enforcement-first tactics. This bill promised something radical: clear rules.

But instead of clarity, the industry got conflict. What followed was a dramatic political standoff involving Coinbase, stablecoin yield, banks, the SEC vs. CFTC, and the White House itself — a moment that may define the future of U.S. crypto regulation well beyond 2026.

For WEEX users trading in a global market, understanding this battle isn't optional. It explains why regulation moves slowly, why prices react to policy headlines, and why “clarity” can sometimes be more dangerous than chaos.

What Is the CLARITY Act? The 2025 Bill That Promised to Fix U.S. Crypto Chaos

The Digital Asset Market Clarity Act (CLARITY Act, H.R. 3633) is a landmark U.S. crypto market structure bill designed to end years of regulatory uncertainty by clearly defining how cryptocurrencies and digital assets are regulated in the United States. Passed by the House of Representatives in July 2025 with strong bipartisan support (294–134), the bill aimed to resolve the long-running SEC vs. CFTC jurisdictional conflict that left the industry trapped in “regulation by enforcement.”

At its core, the CLARITY Act classifies digital assets into three categories:

  • Digital Commodities (such as BTC, ETH, and other sufficiently decentralized tokens) regulated primarily by the CFTC;
  • Investment Contract Assets overseen by the SEC with clearer exemption pathways; and
  • Permitted Payment Stablecoins like USDC and USDT, subject to bank-level prudential rules.

A key innovation was the “mature blockchain” standard, which allows a token to be treated as a commodity if no single entity controls 20% or more of token supply or governance power—offering, for the first time, a measurable legal path out of perpetual securities risk.

Why Experts Thought the CLARITY Act Would Pass (Until the Senate Dropped a Bombshell)

By late 2025, momentum behind the CLARITY Act appeared strong. With the House vote secured, the bill advanced to the Senate, where lawmakers, the White House, and much of the crypto industry viewed it as the missing piece needed to bring legal certainty to U.S. digital asset markets. The earlier passage of the GENIUS Act had already established a regulatory framework for payment stablecoins, raising expectations that comprehensive market structure legislation would follow quickly.

Senate leaders began drafting amendments and preparing for committee markup in early 2026, while industry participants largely remained aligned around the bill's core vision: shifting most spot crypto markets under CFTC oversight and ending years of unpredictable SEC enforcement. At that stage, passage in early 2026 was widely seen as likely—until unexpected changes to the Senate draft triggered a major industry backlash.

*Tip: In the U.S. legislative process, a bill must pass both the House and the Senate in identical form before being sent to the President for signature and becoming law.

January 2026 Turning Point: The Midnight Senate Draft That Stalled CLARITY Act

On January 12, 2026, just days before a scheduled Senate markup vote, lawmakers released a 278-page “manager's amendment.”

As lawyers from Coinbase, a16z, and other firms reviewed the draft, they discovered a series of controversial provisions — quickly labeled “poison pills”:

  • De facto stablecoin yield ban: The Senate draft would prohibit exchanges from offering any yield or rewards on stablecoin holdings — even when returns come from Treasury-backed reserves.
  • Severe limits on tokenized equities and RWAs: New restrictions would effectively block on-chain stocks and real-world assets from scaling, signaling that crypto innovation would be allowed only as long as it does not compete with traditional capital markets.
  • Expanded compliance requirements for DeFi frontends: By imposing AML, sanctions screening, and potential identity checks on DeFi interfaces, the draft risks turning permissionless DeFi into regulated CeFi, undermining privacy and open access.

These provisions directly led to Brian Armstrong, the CEO of Coinbase's withdrawal of support and the stallation of the CLARITY Act.

Coinbase's Ultimatum: How Brian Armstrong’s Protest Forced the Senate to Back Down

In mid-January 2026, the CLARITY Act debate escalated rapidly as Coinbase CEO Brian Armstrong publicly opposed key provisions in the Senate draft, turning a technical review into an industry-wide confrontation.

Jan 14, 2026 (Thursday) Brian Armstrong, CEO of Coinbase publicly announced Coinbase could not support the draft, listing four core objections and drawing a clear line:

“We’d rather see no bill than a bad bill.” This post triggered an immediate industry split and directly contributed to the Senate postponing the scheduled markup.

Jan 15, 2026 (Friday) Armstrong shared a chart (via Scott Johnsson) highlighting strong pro-crypto voter sentiment, adding political pressure to the debate:

“Crazy chart. It's very clear: American voters want crypto.”

Jan 17, 2026 (Saturday) Responding to critics, Armstrong defended Coinbase's position. He emphasized that Coinbase actively works with banks (including JPMorgan and PNC via Coinbase Developer Platform), but accused bank policy arms of regulatory capture:

“This is regulatory capture. Banks using regulation to avoid competition.” He warned that reduced competition would ultimately harm U.S. consumers.

Jan 21, 2026 (Wednesday) Armstrong released a recap video explaining “what happened last week”:

  • Coinbase publicly opposed specific provisions in the Senate draft
  • The Senate postponed markup
  • Discussions shifted toward collaborative fixes He stressed a constructive tone toward lawmakers:

“The Senate has actually been amazing to work with — we just need to protect consumers and fair competition.”

By January 21, the clash had shifted toward negotiation, with the Senate delaying markup and Armstrong signaling openness to fixes—leaving the bill’s fate dependent on whether its most controversial provisions could be revised without stalling the legislation.

Coinbase is the largest, publicly listed U.S. crypto company and the industry's main lobbying force, lawmakers treat its position as a proxy for where the broader crypto industry stands — that's why Coinbase's opposition may lead to the stallation of the act.

Crypto Civil War: Ripple vs. Coinbase on Whether to Accept a Flawed CLARITY Act

Not everyone agreed with Coinbase's hardline stance. Ripple CEO Brad Garlinghouse argued that passing the bill—even with flaws—was preferable to continued regulatory uncertainty, while venture firm a16z aligned with Coinbase, warning against sacrificing privacy and innovation for superficial clarity.

The split exposed a deeper, existential divide within the crypto industry: whether to accept imperfect rules now in exchange for certainty, or reject a bad law and risk waiting longer for a truly workable framework.

BTC Price Drop & Institutional Panic: The Immediate Fallout of the CLARITY Act Stall

The fallout was immediate:

  • BTC and ETH faced short-term pressure
  • Institutional investors paused
  • Regulatory optimism evaporated

Ironically, the stalled bill also delayed banks’ entry into crypto custody due to existing restrictions — showing how regulatory paralysis hurts everyone.

Global Traders Beware: How the CLARITY Act Fight Could Shape Crypto’s Future (Even Outside the U.S.)

The CLARITY Act saga highlights the complexities of crypto regulation. In January 2026, the industry responded to a draft law that included provisions affecting stablecoin yield, tokenization, and decentralization.

For global WEEX users, these developments are significant because U.S. policy influences liquidity, stablecoin rules impact yield, spreads, and capital flows, and regulatory decisions shape where innovation moves next. Clear rules are on the horizon, while the industry continues to navigate the implications of regulatory choices. In a rapidly evolving market, the path to clarity is as important as the clarity itself.

About WEEX

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