The CLARITY Act was meant to bring long-awaited crypto regulation to the US — instead, it collapsed at the last moment. What was supposed to unlock institutional adoption quickly turned into one of the biggest regulatory messes in crypto history.
In this video, we explain what went wrong in the final 48 hours, why major crypto firms pulled their support, and how provisions targeting stablecoin yield, DeFi, and tokenized assets blew the bill apart — leaving the US stuck in regulatory limbo once again. Video by Coin Bureau.
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Major crypto firms, most notably Coinbase, withdrew their support for the Digital Asset Market Clarity Act (CLARITY Act) in January 2026 primarily due to late-stage amendments that were viewed as "catastrophic" to industry innovation and core business models. The withdrawal led to the indefinite postponement of the Senate Banking Committee's markup session originally scheduled for January 15, 2026.
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Primary Reasons for Withdrawal
--Stablecoin Yield Restrictions: A key flashpoint was a provision (related to the GENIUS Act) that would prohibit exchanges and issuers from paying interest or rewards to stablecoin holders. For Coinbase, which generates approximately $1 billion in annual revenue from stablecoin (USDC) rewards, this was a significant financial threat.
--DeFi Restrictions & Privacy: Critics argued the bill included "prohibitions" on decentralized finance (DeFi), extending Bank Secrecy Act obligations to DeFi platforms and granting the government "unlimited access" to user financial records.
--Tokenization Ban: Industry leaders cited a "de facto ban" on tokenized equities, which would impose complex registration requirements that effectively prevent the trading of tokenized U.S. stocks and real-world assets on crypto infrastructure.
--Regulatory Imbalance: The draft was perceived as eroding the CFTC's authority while making it subservient to the SEC, potentially keeping crypto assets under a restrictive securities framework.
Industry Division
The withdrawal of support was not universal, revealing a deep split within the sector:
--Opponents: Led by Coinbase, these firms argued that a flawed bill would cement restrictive, bank-friendly rules that are "worse than no bill at all".
--Supporters: Firms such as Kraken, Ripple, Circle, and a16z Crypto continued to support the bill, arguing that established federal rules—even imperfect ones—are necessary to prevent "chaos" and enable institutional investment.
Current Status
As of January 2026, the Senate Banking Committee has paused deliberations to allow for further negotiations between lawmakers and industry participants. Analysts suggest the delay may mirror the iterative refinement process seen with Europe's MiCA regulation.
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