The Digital Asset Market CLARITY Act is approaching a critical moment on Capitol Hill as Senate committees prepare markups that could break the long-running impasse over U.S. crypto regulation. The Senate Banking Committee has released an amended draft ahead of January 15 markup, while the Senate Agriculture Committee is scheduled to follow later in the month. Republicans backing the bill describe it as a comprehensive framework to provide regulatory clarity, protect investors, and strengthen safeguards against illicit finance, arguing that regulatory uncertainty has driven crypto activity offshore.

The CLARITY Act seeks to clearly divide oversight between the Securities and Exchange Commission and the Commodity FuturesTrading Commission by distinguishing digital assets classified as securities from those treated as commodities. It strengthens disclosure and anti-fraud requirements, limits insider abuse, and preserves existing enforcement powers. On national security, the bill imposes robust anti-money-laundering and counter-terrorism obligations on centralized intermediaries, enhances sanctions compliance, and expands Treasury authority to address high-risk foreign activity. It also shields software developers who do not control customer funds, while placing compliance obligations on centralized entities interacting with decentralized finance protocols.

Despite this momentum, Coinbase CEO Brian Armstrong has warned that the current draft could leave the U.S. crypto industry worse off than under existing rules. He cited concerns over a potential ban on tokenized equities, expanded SEC authority at the expense of the CFTC, restrictions on DeFi, and provisions that could limit stablecoin rewards. Armstrong said Coinbase would “rather have no bill than a bad bill,” though he later expressed cautious optimism that negotiations could still produce a workable outcome.

Stablecoin rewards have emerged as a major flashpoint. Coinbase argues that restricting yield programs would stifle innovation and favor traditional banks, while banking groups warn such products could drain deposits. With stablecoin-related revenue reportedly reaching $1.3 billion in 2025, the issue has become central to the bill’s fate as lawmakers weigh financial stability concerns against innovation and competitiveness.