The U.S. Senate Banking Committee postponed its anticipated markup of the Digital Asset Market CLARITY Act, marking an anticlimactic end to what was expected to be a pivotal week for U.S. crypto policy. This decision, reported by Crypto in America, arose amidst mounting industry opposition and unresolved political disagreements.

Tensions escalated throughout the week as various crypto companies and trade groups voiced their frustration over late-stage amendments to the 278-page market structure bill. Critics argued that these changes unfairly favored banks and traditional finance, particularly through tightened restrictions on stablecoin rewards and tokenization. Concurrently, Democratic committee members continued to advocate for stricter ethics provisions, aiming to prevent senior government officials, including the president, from personally profiting from crypto ventures. These ethics provisions have been a recurring sticking point in negotiations with the White House, contributing significantly to the legislative impasse.

A critical catalyst for the CLARITY Act’s postponement occurred on January 14, around 4:00 p.m., when Coinbase CEO Brian Armstrong publicly announced the exchange's withdrawal of support for the bill. Coinbase had been a highly influential industry proponent of a comprehensive market structure framework, investing considerable resources in lobbying efforts on Capitol Hill. Armstrong stated on X (formerly Twitter) that while appreciating the bipartisan effort, “this version would be materially worse than the current status quo,” concluding, “We’d rather have no bill than a bad bill.” He later expressed optimism for a future compromise and pledged Coinbase’s continued engagement with policymakers on the Act.

Coinbase's withdrawal constituted a significant setback. The loss of support from such a prominent voice in crypto policy risked signaling to undecided senators that the bill lacked sufficient industry consensus, thereby increasing the likelihood of the committee delaying or completely abandoning the markup.

However, Coinbase’s decision did not lead to a complete industry retreat. Several other major firms and advocacy groups, including a16z, Circle, Paradigm, Kraken, Ripple, Coin Center, and the Digital Chamber, publicly reaffirmed their commitment to moving forward with a markup. Kraken co-CEO Arjun Sethi emphasized this sentiment on X, stating, “It is easy to walk away when a process gets difficult. 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.”

In a brief statement announcing the postponement, Senate Banking Committee Chairman Tim Scott (R-SC) confirmed that “everyone remains at the table working in good faith” but did not provide a new date for the markup or specify the issues requiring resolution before rescheduling. The Senate is scheduled for a Martin Luther King Jr. Day recess next week, returning the following week.

Concurrently, the Senate Agriculture Committee, which shares jurisdiction over certain aspects of the bill, particularly spot market oversight and the Commodity Futures Trading Commission’s role, is expected to hold its own markup on the CLARITY Act later in the month, having previously postponed an earlier session. It remains uncertain whether the Banking Committee's delay will impact the Agriculture Committee’s timeline.

The CLARITY Act, based on the House-passed H.R. 3633, is designed to establish a comprehensive federal framework for digital asset markets. Its objectives include dividing oversight between the Securities and Exchange Commission (SEC) and the CFTC, setting standards for payment stablecoins, clarifying rules for decentralized finance (DeFi), and protecting software developers who do not control customer funds.

Supporters, predominantly Republicans, argue that the bill would replace regulatory uncertainty with clear rules, strengthen anti-fraud and illicit finance authorities, and incentivize crypto activity to return onshore. Committee fact sheets describe it as the “strongest illicit finance framework Congress has ever considered” for digital assets.

Conversely, critics contend that the bill would weaken investor protections and potentially create new loopholes. Former SEC Chief Accountant Lynn Turner warned that the CLARITY Act draft lacks Sarbanes-Oxley-level safeguards, such as mandatory audited financial statements, internal control certifications, and robust Public Company Accounting Oversight Board oversight. He argued these deficiencies could pave the way for another FTX-style collapse.

Stablecoin rewards have emerged as one of the most contentious issues within the CLARITY Act. Banking groups argue that yield-bearing stablecoins could divert deposits from traditional banks, while crypto firms counter that broad prohibitions on rewards would stifle innovation and push users towards offshore platforms.