The GENIUS Act ascended the ranks of legislation with little to hitch, clearly defining who could issue stablecoins and earning broad industry support. The CLARITY Act has not been as lucky. Hours before the Senate Banking Committee was set to vote on the Digital Asset Market CLARITY Act, the markup was abruptly postponed indefinitely by Senate Banking Committee Chairman, Tim Scott, just a day before. This was due to Coinbase CEO, Brian Armstrong, announcing withdrawal of support from what was supposed to be crypto’s landmark regulatory victory. “We appreciate all the hard work by members of the Senate to reach a bipartisan outcome, but this version would be materially worse than the current status quo,” Armstrong wrote on X. “We’d rather have no bill than a bad bill.” Meanwhile, Trump crypto advisor, Patrick Witt, remarked: “What a privilege it is to be able to say those words thanks to President Trump’s victory” - an administration that saw the SEC cease its legal pursuit of Ripple, Coinbase and Binance. Coinbase’s last-minute withdrawal of support fractured the industry into opposing camps, with some rallying behind the exchange’s concerns , such as Michael Saylor, whilst major players such as a16z, Ripple and Circle doubled down on backing the legislation.
Kevin O’Leary from the US TV show, Shark Tank
Source: X
The Digital Asset Market CLARITY Act is designed to end years of regulatory ambiguity by establishing clear rules for digital assets in the US. The bill would define which assets are securities versus commodities, establish custody requirements for exchanges, set disclosure standards for token issuers and clarify the division of oversight between the SEC and CFTC. Coinbase’s primary objection has centred on provisions that would effectively prohibit crypto exchanges from offering rewards or yield on stablecoin holdings. And for Coinbase, this is not academic. Stablecoins contribute nearly 20% of the company’s revenue, approximately $355 million in the third quarter of 2025 alone, with most USDC growth occurring on Coinbase’s platform. Armstrong has framed the dispute as regulatory capture by traditional banks seeking to eliminate competition. “It just felt deeply unfair to me that one industry would come in and get to do regulatory capture to ban their competition,” he told FOX Business, adding, “They should have to compete on the level playing field.” Beyond stablecoin yields, Armstrong has outlined additional concerns in his withdrawal statement:
· a de facto ban on tokenised equities - restrictions that would make it nearly impossible to trade stocks on blockchain
· DeFi prohibitions - new rules granting government “unlimited access to financial records”
· erosion of CFTC authority - the draft expands SEC power to classify assets, moving away from industry-preferred CFTC oversight.
Several major firms publicly re-affirmed their support for moving forward, including a16z, Circle, Paradigm, Kraken, Ripple, Coin Center and the Digital Chamber. “It is easy to walk away when a process gets difficult”, Kraken co-CEO, Arjun Sethi, said in a post on X. “What is hard and what actually matters is continuing to show up, working through disagreements, and building consensus in a system designed to require it.” Ripple CEO, Brad Garlinghouse, called the bill a “massive step forward”, arguing that clarity beats chaos and that weaknesses can be addressed through the amendment process. Perhaps most notably was that , a16z’s Chris Dixon, a prominent advocate of the Web3 narrative, wrote: “Now is the time to move the CLARITY Act forward.” He explained that cryptocurrency developers need clear rules and that despite imperfections requiring amendments, this represents the best opportunity for the US to maintain its leading position in crypto innovation. Even Trump’s crypto czar, David Sacks, urged the industry to “resolve any remaining differences”, noting that “passage of market structure legislation remains as close as it’s ever been.” Coinbase’s position did find some support, though far more muted. Crypto analyst, Michaël van de Poppe argued that the stalling benefits crypto by preventing overregulation of DeFi. Some developers and smaller firms such as Etherealize have echoed Armstrong’s concerns regarding narrow decentralisation criteria and heavy disclosure burdens that could push innovation offshore. However, Robinhood CEO, Vlad Tenev, has occupied middle ground, supporting the bill overall whilst acknowledging legitimate concerns surrounding features such as staking, and suggesting the industry could find a path forward despite imperfections.
Hence, the split reveals two fundamentally different approaches to crypto advocacy. Coinbase has opted for confrontation, arguing that if harmful provisions pass into law, the long-term cost of amending legislation and overcoming political resistance will outweigh the pain of continued regulatory uncertainty. The a16z-Ripple-Kraken coalition takes a more pragmatic stance, acknowledging the bill’s flaws but arguing that imperfect rules beat regulatory limbo, and that specific amendments can fix problems during the legislative process. This reflects different business models and priorities - for Coinbase, stablecoin yields are existential revenue, for venture firms such as a16z, the priority is establishing any framework that allows portfolio companies to operate legally in the US. Certainly, the drama intensified when White House officials labelled Coinbase’s withdrawal a “rug pull” against the administration and threatened to withdraw support for the bill entirely. Armstrong pushed back, stating the White House has been “super constructive” and that administration officials encouraged Coinbase to explore compromises with community banks. Unsurprisingly, the tension highlights the awkward political position the crypto industry now occupies. After spending a quarter-billion dollars to help elect sympathetic lawmakers, crypto’s biggest obstacle to achieving comprehensive legislation might be crypto itself. Senator Tim Scott said that “everyone remains at the table working in good faith”, but offered no new timeline for rescheduling the markup or specifics on which issues must be resolved. Meanwhile, the Senate Agriculture Committee, having jurisdiction over the CTFC, is preparing to release its own draft text, raising the possibility that the schism could widen as different versions of the bill move forward through separate committees.
It seems the political calendar is working against the industry. With midterm elections approaching, lawmakers, by tradition, become increasingly hesitant to tackle divisive, complex issues during campaign season. The window for meaningful reform may be closing fast. For an industry that has long complained about regulatory uncertainty, the CLARITY Act stalling raises a good question: what does crypto need? Whether this means principled resistance to regulatory capture or shortsighted corporate interest-seeking depends largely on which side of the split you occupy. What is undeniable is that things are unclear in the US crypto markets. Likewise, the path to regulatory clarity just became unclear. Hopefully the CLARITY Act will materialise soon enough to dispel all unclarity.
This article first appeared in Digital Bytes (10th of February, 2026), a weekly newsletter by Jonny Fry of Team Blockchain.