Washington's "Coming of Age": Analyzing the Power, Interests, and Hatred Behind CLARITY

At the beginning of 2026, after five years of regulatory tug-of-war and hundreds of enforcement cases, the global cryptocurrency market's attention turned to Capitol Hill in Washington. The bill named CLARITY was intended to provide clarity for digital assets that have long been in a regulatory gray area, but at the last moment, it evolved into an ultimate game between the old and new financial orders.

On January 17, the White House announced it might reconsider its support, pushing the CLARITY Act into the spotlight.

Today, we open this hundreds-page bill, not to chew on legal clauses, but to explore: why did Coinbase, which once led the embrace of regulation, "turn against" at the last moment? As retail investors, how will these hundreds of pages change your wallet?

1️⃣ Background: The End of the Jungle Law

Before the birth of the CLARITY Act, cryptocurrency regulation in the U.S. resembled a lawless land, where major players struggled amid chaos:

*

###### The Civil War of Dual Hegemony: Before CLARITY, the U.S. lacked a unified framework for crypto assets. The SEC wanted to regulate tokens as stocks, while the CFTC aimed to treat tokens as commodities. Projects in the middle never knew which agency would come knocking tomorrow.

*

###### The Fear of "Lawsuits Instead of Regulation": Due to the lack of clear laws, the SEC chose a blunt approach: "sue first, regulate later."

@Ripple,
@Coinbase

###### both suffered greatly; for instance, the Ripple case has lasted over three years, directly impacting the market cap fluctuations of XRP by hundreds of billions of dollars and becoming a psychological shadow over the entire industry. This led to a significant outflow of talent and capital to places like Singapore and Europe.

*

###### The Anxiety of Traditional Banks: Stablecoins offer an average annual yield of 4.2%, far exceeding traditional bank savings rates, raising concerns about potential monthly deposit losses exceeding $20 billion. To protect their "pockets," banking lobbyists urgently needed a legal framework to rein in cryptocurrencies.

To end the chaos, this hundreds-page Clarity Act attempted to redefine market rules:

1.

###### Clear Management Entities: Assets that are sufficiently decentralized and no longer rely on a single issuer (like Bitcoin) will be regulated by the CFTC. Assets that are in early stages and have obvious financing attributes will be regulated by the SEC.

2.

###### Integration of Stablecoin Framework: "Licensed payment stablecoins" that meet the GENIUS Act criteria will be excluded from the definition of securities, with their trading use supervised by the CFTC/SEC, and issuance and reserve requirements referencing the GENIUS Act.

Ending regulatory infighting and providing the market with a "predictable future." This is why companies like Coinbase, Ripple, and Kraken initially publicly supported CLARITY.

Until the Senate version appeared.

2️⃣ The "Late-Night Reversal" of the Bald Guy

The initial version of the CLARITY Act was meant to be clear, attempting to redefine rules through three pillars: asset classification, financing regulation, and stablecoin access. However, in the Senate revision in January 2026, the winds changed, and the terms became extremely harsh:

1.

###### Ban on Tokenization of U.S. Stocks: The Senate draft included clauses that effectively restricted the direct tokenization of traditional financial assets (like U.S. stocks and bonds) on public chains.

2.

###### RWA Defined as Securities: The bill explicitly excluded RWAs from digital commodities, meaning they would be subject to extremely strict and inflexible securities law regulation, potentially even preventing them from being listed on CEX.

This revision sparked intense discussions within the industry, with Coinbase CEO
@brian_armstrong
publicly withdrawing support for the bill, stating that the revised bill was worse than having no bill at all. The core points of opposition mainly included three:

1.

###### Stifling Stablecoin Rewards (the most direct conflict of interest): Coinbase partnered with Circle, allowing users holding

$USDC

###### to earn about 3.5% rewards. This contributed significantly to Coinbase's revenue. Banking lobbyists pushed hard for this clause, fearing that depositors would move funds from banks to interest-earning stablecoins.

2.

###### The Ban on Tokenization of U.S. Stocks and RWA: Coinbase has always been optimistic about tokenization, believing it to be the future of finance. The new bill, through complex registration requirements, effectively prohibited the free trading of tokenized stocks on crypto infrastructure.

3.

###### The Doom of DeFi: The bill requires almost all DeFi protocols to register like banks or brokers, granting the government high access to DeFi transaction data. Brian Armstrong believes this infringes on user privacy and is technically unfeasible.

3️⃣ How Will the CLARITY Act Affect Us?

The same bill presents entirely different scenarios for different market participants.

1. Retail Investors: A Double-Edged Sword

*

###### Positive: The bill mandates that CEX must isolate customer funds and have them custodied by third parties, fundamentally preventing tragedies like FTX.

*

###### Negative: Due to the 2026 amendment protecting banks, retail investors may lose 3% to 5% of CEX stablecoin holding interest, and with RWA being restricted, the vision of ordinary people purchasing fractional shares (like 0.01 shares of Tesla) on-chain may also vanish. Of course, this depends on whether the assets and CEX are subject to the bill's jurisdiction.

2. Institutions: Compliance Dividend
   For institutions, this feels more like a long-awaited compliance ticket. Legal certainty is a prerequisite for giants like Goldman Sachs and BlackRock to enter the market.
   Once the jurisdictional boundaries between the SEC and CFTC are clarified, billions of dollars in institutional funds will be allocated compliantly to digital commodities beyond Bitcoin and Ethereum, which will inevitably trigger a wave of applications for altcoin spot ETFs.
3. Projects: Some Happy, Some Sad
   Projects defined as digital commodities will be free from the SEC's entanglement; those defined as securities will face extremely heavy compliance reporting obligations and financing restrictions.
   Additionally, the bill mandates a token lock-up period for core team members, effectively curbing the bad habit of dumping at launch.
   Fortunately, the bill explicitly protects non-custodial developers. If you only write code and release open-source protocols without touching customer funds, you will not be considered a Money Transmitter, which protects pure technical innovation at the protocol level.

4️⃣ Industry Debate: Consensus or Division?

Biteye summarized the positions of industry KOLs and projects regarding the latest revised bill.

AB Kuai.Dong
@FORAB (XHunt Ranking: 1087) 🔗 https://x.com/_FORAB/status/2011710073933095037 Viewpoint: Reports on Coinbase's sudden reversal, believing the latest version of the bill is friendly to traditional banks but detrimental to crypto-native companies. Specific points of opposition include limiting stablecoin rewards, increasing costs for stock tokenization, and expanding government oversight of DeFi, which could stifle innovation. qinbafrank @qinbafrank (XHunt Ranking: 1533) 🔗 https://x.com/qinbafrank/status/2011631328555647098 Viewpoint: Points out that the Senate Banking Committee canceled its review due to Coinbase's opposition, which could lead to a market correction. Focus of opposition includes the "actual ban" on tokenized equity, invasion of DeFi privacy, weakening CFTC power, and cancellation of stablecoin reward mechanisms, believing this will allow the SEC to dominate and suppress innovation. Phyrex @PhyrexNi
(XHunt Ranking: 765) 🔗
https://x.com/Phyrex_Ni/status/2011810871211925967
Viewpoint: Analyzes the reasons behind Coinbase CEO's obstruction of the bill, including restrictions on tokenized stocks, functional regulation of DeFi, SEC power boundary issues, and ethical conflicts of interest regarding the Trump family.
PANews
@PANews
(XHunt Ranking: 1827) 🔗
https://x.com/PANews/status/2011013801802686752
Viewpoint: Believes that if the proposal is delayed, it will become increasingly unfavorable. January is one of the few available structural legislative windows for the Senate, and if it fails to advance substantively, it could easily be "naturally squeezed out" of the overall legislative agenda. Additionally, if the Democrats gain an advantage in the midterm elections, the probability of passage will be lower.
Chen Jian Jason
@jasonchen998 (XHunt Ranking: 1082) 🔗 https://x.com/jason_chen998/status/2012358494901694931 Viewpoint: Believes the conflict is fundamentally driven by interests, such as Coinbase's public opposition being due to the current version's ban on earning interest on stablecoins, which would directly lead to a loss of $1 billion in annual revenue and a significant user outflow, while Ripple's CEO strongly supports the advancement of the CLARITY Act, as the ban on earning interest on stablecoins does not significantly affect Ripple. Bitcoin Orange @chengzi95330
(XHunt Ranking: 3508)
https://x.com/chengzi_95330/status/2012136666912494037
Viewpoint: Points out that although the current proposal is imperfect, a16z, Circle, Kraken, and others are willing to continue pushing it forward, fearing that if they "flip the table" now, the legislative window may close directly; while Coinbase believes that if they cannot address core issues like stablecoin yields in such a crypto-friendly political environment, there will be no opportunity in future, more anti-crypto political cycles, so they are making a "historical judgment bet." Brad Garlinghouse (Ripple CEO)
@bgarlinghouse
(XHunt Ranking: 1870) 🔗
https://x.com/bgarlinghouse/status/2011559973818343785
Viewpoint: Surprised by Coinbase's strong opposition, believes Brian's concerns are reasonable, but emphasizes that "the rest of the industry is still constructively supporting and working to solve problems." Garlinghouse stated that Ripple is ready to advance under a compliance framework (such as XRPL tokenization), viewing the bill as a step forward and unwilling to abandon the overall process due to disagreements.
Vlad Tenev (Robinhood CEO)
@vladtenev
(XHunt Ranking: 380) 🔗
https://x.com/vladtenev/status/2011622052457783432
Viewpoint: Supports advancement. He reiterated Robinhood's support for Congress to pass the market structure bill, acknowledging that there is still work to be done (such as addressing staking restrictions in certain states and the availability of stock tokenization), but sees a clear path and is willing to assist the Senate Banking Committee in completing it. Emphasizes that the U.S. needs to lead crypto policy to unlock innovation and protect consumers.
Arjun Sethi (Kraken co-CEO)
@arjunsethi
(XHunt Ranking: 1941) 🔗
https://x.com/arjunsethi/status/2011579807272759639
Viewpoint: Strongly supportive. He stated that Kraken is fully committed to supporting Tim Scott and Cynthia Lummis's efforts, criticizing that "walking away or declaring defeat" is easy, but what truly matters is "continuing to show up, solve problems, and build consensus." Warns that if abandoned, uncertainty will increase, pushing innovation overseas.

5️⃣ Retail Investors' Hedging and Gold Mining: 2026 Action Guide

A coming-of-age ceremony, a new beginning.
Throughout the entire game of the CLARITY Act, it is essentially a "coming-of-age ceremony" for the crypto industry. It marks the official leap of cryptocurrencies from the margins to the main stage of global finance.
The "clarity" of regulation itself is the greatest infrastructure. For retail investors, understanding and adapting to these new rules is key to defending and growing assets in the coming years.
Here are three practical, executable action plans summarized by Biteye for you.

1. Reassess Asset Allocation, Tilt Towards "Digital Commodity" Assets
   For crypto asset holdings, consider increasing the allocation weight of assets explicitly classified as "digital commodities" (such as Bitcoin, Ethereum, etc.) and mature blue-chip tokens within their ecosystems. These assets will be the first to welcome large-scale compliant capital inflows from traditional institutions as regulatory uncertainties are eliminated, and products like spot ETFs are more likely to be approved, thus forming strong price support. In contrast, new tokens that are likely to be classified as "securities" should be approached with extreme caution, as they will face stringent disclosure and financing restrictions, and liquidity may dry up.
2. Reconfigure Stablecoin Strategy, Seek Yield Alternatives
   If users are in regions under Clarity's jurisdiction (like the U.S.), due to the bill potentially limiting CEX (like Coinbase, Circle) from providing 3% to 5% stablecoin rewards, if the bill is formally implemented leading to zero interest for compliant exchanges, consider shifting funds to non-custodial on-chain DeFi protocols. Although the bill has strengthened regulation over DeFi, as long as the protocol itself possesses censorship resistance, its native yields may become a safe haven.
3. Approach the RWA Track with Caution, Beware of Liquidity Traps
   Given the Senate revision's extremely harsh attitude towards RWAs (real-world assets), which may even prohibit their listing on CEX, if you currently hold a large amount of tokenized U.S. stocks or bonds, be wary of liquidity depletion risks. Additionally, before the dust settles on the bill, do not blindly participate in tokenized traditional financial products that require high compliance and real-name verification (KYC), as these products are most likely to be forced to shut down due to policy changes.