After significant legislative negotiation and industry scrutiny, the Digital Asset Market CLARITY Act is reaching a crucial stage on Capitol Hill, with Senate committees preparing markups that could resolve the ongoing deadlock on U.S. crypto regulation. The Senate Banking Committee released an amended draft of the CLARITY Act ahead of its scheduled markup on January 15, while the Senate Agriculture Committee also set a markup for late January. Senate Republicans on the Banking, Housing, and Urban Affairs Committee have released fact sheets detailing the Act, framing it as a comprehensive effort to establish a clear federal framework for digital asset markets, enhance investor protections, and combat illicit finance. Proponents argue that the current lack of statutory clarity has driven activity offshore, exposing investors and national security to risks.

Republicans emphasize that the CLARITY Act prioritizes consumer protection, national security, and regulatory clarity. The legislation aims to establish enforceable rules that differentiate between digital assets classified as securities and those as commodities, thereby formally dividing oversight responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Regarding consumer protection, the bill strengthens disclosure requirements, preserves existing anti-fraud authorities, and limits insider abuse. Digital asset issuers would remain subject to resale restrictions and anti-evasion rules, with fraud remaining illegal and fully enforceable by regulators.

A key focus of the CLARITY Act is national security and illicit finance. The fact sheets assert that the bill includes the strongest illicit-finance framework Congress has considered for digital assets to date. Under the proposal, centralized intermediaries would be subject to anti-money-laundering (AML) and counter-terrorist financing (CTF) obligations, strengthened sanctions compliance, and enhanced Treasury authority to address high-risk foreign activities. Lawmakers aim to close regulatory gaps without compelling legitimate activities overseas. The Act also addresses decentralized finance (DeFi) and software development, an area of concern for crypto developers. Committee materials state that the legislation explicitly protects software developers who publish or maintain code without controlling customer funds, while preserving the right to self-custody digital assets. Regulatory obligations would instead target centralized intermediaries interacting with DeFi protocols, requiring tailored risk-management and cybersecurity standards. Supporters also argue that the CLARITY Act closes loopholes rather than creating them, establishing a joint SEC-CFTC advisory committee to harmonize regulatory requirements and including provisions to prevent regulatory arbitrage or evasion of U.S. rules. Republicans on the committee have asserted that the bill is the result of years of bipartisan effort, regulator engagement, and consultation with law enforcement, focusing on public-interest outcomes.

Despite the legislative progress, Coinbase CEO Brian Armstrong has stated that the exchange cannot support the Senate Banking Committee’s latest draft of the CLARITY Act, warning that the bill, as currently written, would leave the U.S. crypto industry in a worse position than the existing regulatory status quo. Armstrong cited several concerns, including what he described as a de facto ban on tokenized equities, new restrictions on decentralized finance that could grant the government broad access to users’ financial data, and provisions that would weaken the Commodity Futures Trading Commission while expanding the Securities and Exchange Commission’s authority. He further criticized draft amendments that would eliminate rewards on stablecoins, arguing that such measures would allow banks to suppress emerging competitors. Armstrong emphasized, “We’d rather have no bill than a bad bill,” and confirmed that Coinbase would continue to advocate for a framework that ensures a level playing field for crypto alongside traditional financial services.

The issue of stablecoin rewards has become a significant point of contention in the negotiations. Coinbase had reportedly cautioned lawmakers that it might withdraw support for the bill if it restricts yield programs linked to stablecoins like USD Coin. Coinbase shares in interest income from USDC reserves, utilizing part of this revenue to offer incentives, including rewards of approximately 3.5% for its Coinbase One customers. Stablecoin-related revenue reportedly reached $1.3 billion in 2025, making this issue central to Coinbase’s business model. While banking groups argue that yield-bearing stablecoins could divert deposits from traditional banks, crypto firms contend that banning rewards would stifle innovation and push users towards offshore platforms. Despite these challenges, Armstrong later expressed optimism, stating, “I’m actually quite optimistic that we will get to the right outcome with continued effort,” and reaffirmed Coinbase's commitment to collaborating for a positive resolution.