Bitcoin’s rally this week hit a wall right around the time the Senate Banking Committee released its “Myth vs. Fact” explainer on the Digital Asset Market Clarity Act of 2025 (H.R. 3633, the Clarity Act). The timing feels far from coincidental.
After years of regulatory uncertainty, the Clarity Act passed both House committees (Financial Services and Agriculture) in late 2025. It is the most serious attempt yet to give the U.S. a coherent federal framework for digital assets. It assigns the CFTC primary authority over “digital commodities” (non-security tokens like Bitcoin and post-merge Ethereum) and intermediaries, while preserving SEC oversight of primary market sales that still meet the Howey test.
The Senate Banking Committee’s January 14, 2026, statement framed the bill as a protective, pro-innovation measure that will:
- Protect Main Street investors
- Keep capital and innovation inside the U.S.
- Safeguard national security
Yet one of the loudest voices against it has been Coinbase.
Why is Coinbase Blocking the Clarity Act?
This week Coinbase CEO Brian Armstrong took to social media to share his misgivings about the Clarity Act. He stated how the bill had too many issues including:
- A defacto ban on tokenized equities
- DeFi prohibitions, giving the government unlimited access to your financial records and removing your right to privacy
- Erosion of the CFTC’s authority, stifling innovation and making it subservient to the SEC
- Draft amendments that would kill rewards on stablecoins, allowing banks to ban their competition
On the same day Faryar Shirzad, Chief Policy Officer at Coinbase, spoke with CNBC. He addressed the problem regarding rewards on stablecoins, by saying that Coinbase is looking at the interests of consumers first and foremost. He also shared how the work being done by StandWithCrypto has been extraordinary. 250,000 messages have been sent to members of Congress about misgivings amongst consumers related to stablecoin rewards.
Faryar was complimentary about the work being done by legislators but highlighted how “the details matter.” He pointed to how the matter now rested in the hands of the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Tim Scott (Republican).
The Senator stated on the same day how “I’ve spoken with leaders across the crypto industry, the financial sector, and my Democratic and Republican colleagues, and everyone remains at the table working in good faith.
“This bill reflects months of serious bipartisan negotiations and real input from innovators, investors, and law enforcement. The goal is to deliver clear rules of the road that protect consumers, strengthen our national security, and ensure the future of finance is built in the United States.”
What does this mean for digital assets investors though?
Why are Stablecoin Rewards so Important?
There are many online commentators besides the leadership team at Coinbase who believe that the banking industry is putting its interests ahead of those of the consumer. The average reward for staking USDC (Circle’s US Dollar-backed stablecoin) is 3.5% according to the Coinbase website. At the same time leading banks like Chase or Wells Fargo offer low interest on deposits, often less than 1%. The exception is for Certificate of Deposit accounts which can offer up to 4% but need a minimum cash amount to be locked for a period.
The risk of capital flight is clear to see. And, while bank deposits are insured by the FDIC up to $250,000, the same guarantees don’t apply to stablecoins. With a large majority of crypto enthusiasts represented by a younger demography there is a risk that banks are unable to compete with returns being offered by stablecoin issuers.
Brian Moynihan, CEO of Bank of America, warned during the bank’s investor presentation this week that there is a possibility of $6 trillion in deposits moving into stablecoins if rewards remain.
In the case of Coinbase there is one more element to consider. In the first quarter of 2025, Coinbase earned roughly $300 million in distribution payments from Circle. A revenue stream that is linked to rewards. If this reward pool is removed, Coinbase stands to lose around $1 billion in revenue per year. Not to mention the loss of rewards its customers would experience.
This problem has been part of the reason why the grassroots movement StandWithCrypto has gained so much attention. The organization is fighting for consumers to keep hold of their rewards. At the same time banks are lobbying the Senate to have these rewards removed.
Who is Supporting the Clarity Act?
The firms supporting the Clarity Act include Andreessen Horowitz, Ripple, Kraken and others. Long-term crypto enthusiasts won’t be surprised to see Ripple listed. As for Kraken and Andreessen Horowitz, they both have business models that the Act would help grow.
Brad Garlinghouse, CEO of Ripple Labs, posted on X this week, how “clarity beats chaos, and this bill’s success is crypto’s success.” Ripple continues to be at the table and remains optimistic.
Dante Disparte, Chief Strategy Officer of Circle, posted on X this week, how “we encourage Congress to remain engaged in a bipartisan manner on advancing crypto market structure rules that promote rules-based competition in broader digital assets markets – without reopening the GENIUS Act.”
Arjun Sethi, Co-Ceo at Kraken, posted on X this week, how him and “Kraken remain fully committed to supporting Chairman Scott and Subcommittee Chair Lummis’s efforts to advance the market structure bill.
“This legislation is not about favoring any single company or business model. It is about ensuring that US based exchanges and financial institutions can compete globally on a level playing field rather than operating at a structural disadvantage to foreign counterparts with clearer rules.”
The Future of Crypto in the U.S.
One person that has a lot of skin in the game is David Sacks, the White House AI and Crypto Advisor. It’s been almost a year since David started in his role. The Genius Act will have been a major milestone for him, but the Clarity Act would be the icing on the cake.
David has been working with Senator Scott on the Clarity Act for some time. He posted on X this week how “The White House remains committed to working with Chairman Scott, members of the Senate Banking Committee, and industry stakeholders to pass bipartisan crypto market structure legislation as soon as possible.”
He will need to pass it as soon as possible. A government shutdown may be on the cards later this month. Later in 2026 there are mid-terms where a Blue Wave may affect the Republicans ability to pass legislation.
For those of you hoping to see a further rise in XRP or Bitcoin prices, David and the Senate need to put a shift in. For bankers who want to keep the status quo, you better hope that Coinbase gives up a large revenue stream without too much resistance. More importantly, for legislators around the world looking at how to implement legislation in their own countries, you better keep watching this space. We are.
Author: Andy Samu
