Objections from Coinbase helped scuttle the Senate’s consideration of the Clarity Act, a landmark crypto infrastructure bill. After Coinbase CEO Brian Armstrong said the bill would amount to a “de facto ban” on tokenized equity offerings, the Senate canceled its markup session, which is now expected to be rescheduled in the coming months.
The bill, which has already passed the House, seeks to ending regulatory uncertainty around digital assets by clarifying which assets fall under securities law and which qualify as commodities, dividing oversight between the SEC and the Commodity Futures Trading Commission.
Armstrong has also argued that the bill would prevent crypto exchanges from offering customers interest on stablecoins. While the GENIUS Act prohibits such rewards, some exchanges have relied on a loophole allowing stablecoin issuers to indirectly fund payments to holders.
The American Bankers Association has warned that allowing crypto to offer interest-like rewards “will siphon trillions from local lending, leaving less money available for car loans, agricultural loans, mortgages, and small business borrowing that drive local economies.”
Crypto Execs Demur
Other crypto executives disagreed with Coinbase’s position.
“We don’t interpret the CLARITY draft as a ‘de facto ban’ on tokenized equities,” Gabe Otte, co-founder and CEO of Dinari, told CoinDesk. “What it does do is reaffirm that tokenized equities remain securities and should operate within existing securities laws and investor protection standards.”
Citron Research went so far as to publicly accuse Coinbase of opposing the Senate’s draft CLARITY Act out of fear of competition.
“Coming This Year”
Coinbase certainly has the clout to pursue legislation that advances its core objectives. Given the pushback from other corners of the crypto community, it’s clear that no single bill can satisfy everyone.
“The decision to pull support for the market structure bill was not made lightly,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It came from multiple areas including tokenized equities, DeFi issues, and the role of the SEC. Armstrong wants 100% or dang close to it, but there are other solid representatives working on this bill that will continue to move forward and get a solid piece of legislation passed.
“The act has the potential to be good for the industry,” Hugentobler added. “Traditional finance won’t fully embrace this tech until there’s a solid regulatory framework. This is a complex industry with a lot of moving parts, so it may take some time, but I think it’s coming this year.
