CLARITY Act Markup Delayed Amid Coinbase Opposition: Key Stakes, Risks and What Comes Next for Crypto Regulation

January 15, 2026 is shaping up to be one of the most important dates for U.S. crypto policy in years: the Senate Banking Committee has scheduled an executive session (markup) to consider H.R. 3633, the Digital Asset Market Clarity (CLARITY) Act of 2025.

The CLARITY Act was introduced in May 2025 by a bipartisan group of House lawmakers led by House Financial Services Committee Chair Patrick McHenry and House Agriculture Committee Chair Glenn “GT” Thompson, reflecting a joint effort by the committees overseeing securities and commodities regulation. 

The legislation was drafted in response to years of regulatory fragmentation, enforcement-driven policymaking, and repeated calls from industry, investors, and regulators for clearer “rules of the road” for crypto markets.

At its core, the bill aims to define when a digital asset should be regulated as a security by the Securities and Exchange Commission (SEC) and when it should fall under the Commodity Futures Trading Commission (CFTC), a question that has shaped nearly every major crypto enforcement action and policy debate over the past decade.

A markup is the stage where legislation stops being an idea and starts becoming text that can pass. Senators debate the bill line-by-line, offer amendments, and decide what the “final” committee version looks like before it can move toward a Senate floor vote.

This article explains what to watch and why this markup could determine whether 2026 finally becomes the year of “rules of the road” for crypto in the U.S.

What is the CLARITY Act?

The CLARITY Act is a comprehensive crypto market structure bill, which is designed to answer the question that has defined U.S. crypto regulation for a decade:

Which digital assets are regulated like securities (SEC) and which are regulated like commodities (CFTC) and what compliance path applies?

In the House-passed framework (H.R. 3633), the CFTC gets a central role regulating digital commodities (including spot markets and intermediaries like exchanges, brokers, and dealers), while the SEC retains authority over securities-related activity and certain primary-market fundraising mechanics.

Coinbase and Senate Leaders Clash Over Crypto Bill Ahead of Markup

Coinbase CEO Brian Armstrong publicly withdrew support for the Senate Banking Committee’s draft crypto market-structure legislation, stating that the bill, as written, contains provisions that could harm innovation and market competition.

After reviewing the latest text, Armstrong warned that it includes provisions effectively banning tokenized equities, imposes restrictions on decentralized finance that could give the government broad access to user financial data, weakens the CFTC authority relative to the SEC, and could eliminate stablecoin rewards, a feature Coinbase currently offers to customers.

He emphasized that “we’d rather have no bill than a bad bill” and expressed hope for a better draft that treats crypto fairly alongside traditional financial services.

In response to the broader legislative process, Senate Banking Committee Chairman Tim Scott highlighted that lawmakers remain engaged in bipartisan negotiations despite the opposition from Coinbase.

Scott said he has been in discussions with leaders across the crypto industry, the financial sector, and both parties in the Senate, with the goal of crafting a bill that provides clear rules of the road, protects consumers, supports national security, and ensures the future of finance is built in the United States.

As a result of ongoing discussions, the Committee postponed the planned markup to continue refining the legislation.

Why There Are Two Drafts (SEC vs. CFTC Jurisdiction)

• Securities and Exchange Commission (SEC): Oversees securities under existing securities laws.
• Commodity Futures Trading Commission (CFTC): Oversees commodities and futures markets. Under the proposed CLARITY framework, spot markets for “digital commodities” would also fall under the CFTC.

Senate Banking Committee Draft

What Happens After Both Markups

Why January 15 Matters for Crypto Regulation

The Senate Banking Committee calendar is explicit: the committee will meet Thursday, January 15, 2026 at 10:00 AM to consider H.R.3633.

This is the first major “decision point” where:

• provisions can be tightened, softened, or rewritten;
• politically sensitive sections get resolved (or postponed);
• and a bill either gains momentum – or loses it.

And it’s happening after the House already passed the CLARITY Act 294–134 in July 2025, putting real pressure on the Senate to either move a version forward or propose an alternative.

The Stakes: What Could Change for Crypto Companies and Users If CLARITY Act is Approved

1) SEC vs. CFTC: The “Who Regulates What” Map

At the heart of CLARITY is jurisdiction. The House text sets up a framework where “digital commodities” fall under the CFTC with registration and “core principles” for exchanges, brokers, and dealers.

For the market, this isn’t academic:

• Exchanges want clearer listing and oversight rules.
• Institutions want a definitional regime that doesn’t shift midstream.
• Builders want to know whether a token can trade without every participant fearing retroactive securities claims.

2) A Compliance On-Ramp for Platforms

A major practical question is whether the bill creates a realistic path for today’s major crypto venues to become compliant without shutting down U.S. products.

H.R. 3633 includes registration pathways for digital commodity exchanges/brokers/dealers, plus standards around trade monitoring, recordkeeping, and conflicts of interest.

3) Consumer Protections And Customer Asset Rules

Expect heavy attention on custody and customer protections. The Congressional Research Service (CRS) summary highlights rules around exchange requirements and treatment of customer assets, as well as supervision of intermediaries that touch retail users.

4) AML and Illicit Finance Obligations

One of the most consequential (and least “headline”) parts: H.R. 3633 explicitly brings certain digital commodity intermediaries under the Bank Secrecy Act (BSA) framework.

This matters because many of the biggest policy fights now revolve around:

• who is responsible for AML compliance in complex crypto ecosystems;
• what obligations attach to intermediaries vs. decentralized protocols;
• and how enforcement is coordinated across agencies.

Security and transparency groups have warned lawmakers about potential gaps in crypto market structure legislation relating to national security and illicit finance – so AML-related amendments are a real possibility in markup.

The Biggest “Markup Watch” Issues Likely to Surface

Even if you never read legislative text, the markup battle typically comes down to a few recurring fault lines:

1. Definitions: “Digital Commodity,” “Mature Blockchain,” and Classification Triggers

Definitions drive outcomes. The House framework defines digital commodity and introduces “mature blockchain” concepts tied to decentralization/control tests and disclosure expectations.

In markup, small definitional changes can:

• shift a token into SEC territory,
• move platform obligations,
• or expand/narrow what projects must disclose.

2. Primary Market Fundraising vs. Secondary Market Trading

CLARITY is trying to separate fundraising activity (often the SEC focus) from secondary market trading in a way lawmakers can defend and regulators can implement. This tension is one reason market structure bills live or die  and why amendments here are especially sensitive.

3. Defi Scope (Without Turning It Into a Political Brawl)

Markup amendments often attempt to clarify:

• what counts as an “intermediary,”
• which activities are captured,
• and who the compliance entity is when software is decentralized.

The House bill contemplates that some decentralized activity may be outside certain provisions while still being subject to anti-fraud/anti-manipulation authority.

4. Stablecoins: Not the Core of CLARITY, but Still in The Room

Even though stablecoins are often treated in separate legislation (GENIUS Act), the Senate’s market structure negotiations have been happening in the shadow of stablecoin policy, especially after the House passed stablecoin legislation in 2025.

If stablecoin-related issues (like yield or payments functionality) are discussed around the markup process, it may affect coalition-building and the pace of a unified package.

Brian Armstrong Calls for Market-Driven Stablecoin Rewards

Coinbase CEO Brian Armstrong argues that China has chosen to pay interest on its own stablecoin because it benefits ordinary people and because it’s a clear competitive advantage.

“I worry that in the U.S., we’re missing the forest for the trees. Rewards on stablecoins won’t meaningfully change lending markets, but they do have a major impact on whether U.S. stablecoins can compete globally.

Rewards, or even direct interest, benefit everyday users in the same way community lending does. We should allow both models to coexist and let the market decide.”

Can the CLARITY Act Reduce Forced Liquidation Crashes like Oct.10, 2025?

A crash like Oct. 10, 2025 (“10/10”) was fundamentally a leverage + liquidity + venue-design stress event: more than $19B of leveraged positions were liquidated in a day, and liquidity on major venues thinned dramatically.

The CLARITY Act can’t guarantee preventing (“stopping”) a macro-driven deleveraging spiral, especially if leverage is concentrated in perpetual futures or offshore venues, but it can reduce the odds and severity of a “10/10”-style breakdown by tightening market structure where U.S. law currently has big gaps.

Here’s where the CLARITY Act could reduce the chance/severity of a “10/10” crash:

1. Bringing Spot Crypto Venues Into a Single, Enforceable Rulebook (CFTC “Core Principles”)

A major vulnerability on 10/10 was how quickly liquidity vanished and how uneven venue practices can be under stress. The CLARITY Act would require digital commodity exchanges (DCEs), brokers, and dealers to register with the CFTC, and it establishes “Core Principles” for exchanges that include trade monitoring, recordkeeping/reporting, antitrust considerations, and minimizing conflicts of interest.

Why this matters in a crash:

• Trade surveillance + monitoring can deter or detect manipulation that worsens cascades.
• Consistent market integrity standards reduce “weakest venue” problems where one platform’s microstructure amplifies the move across the ecosystem.

2. Customer Asset Protections That Can Reduce Panic Dynamics

During rapid sell-offs, user behavior is heavily influenced by confidence in custody and settlement. Under the CRS summary of H.R. 3633, the bill would prohibit commingling of exchange assets with customer assets (with limited waiver ability). 

Why this matters in a crash:

• Better segregation rules can reduce “run risk” (users rushing to withdraw because they fear an exchange is using their assets), which can deepen liquidity stress.

3. Limits on Exchange Self-Dealing and Conflicts that can Worsen Forced-Liquidation Spirals

One stress multiplier in leveraged markets is when venues (or affiliates) can trade against customers or have incentives that conflict with orderly markets. The CRS overview notes the bill would prohibit DCEs and affiliates from trading for their own accounts, with only narrow, rule-permitted exceptions.

Why this matters in a crash:

• Reduces perceptions (and potential realities) of venue-side predatory behavior that can accelerate liquidations.
• Encourages cleaner separation between exchange operation and proprietary positioning.

4. Stronger Listing/Disclosure Requirements that can Improve Pricing Quality Under Stress

FTI Consulting describes “10/10” as a moment when venue design and liquidity interacted badly under pressure.

CLARITY would require that before listing new digital commodities, DCEs publish specific information (CRS lists examples like source code, transaction history, and “digital commodity economics”) and restrict listing to commodities tied to mature blockchains or those with ongoing reporting by the issuer.

Why this matters in a crash:

• Better standardized disclosures can reduce information shocks and “unknown unknowns” that cause liquidity providers to step away.
• More consistent listing standards can reduce the long tail of thin, fragile assets that often experience the worst liquidation cascades.

5. AML/BSA coverage for newly regulated intermediaries

The CRS summary also notes the bill would apply the Bank Secrecy Act to new DCEs/brokers/dealers, bringing them under AML expectations.

Why this matters in a crash:

• It doesn’t stop a liquidation spiral directly, but it helps reduce illicit-flow-driven volatility and improves the ability of regulators to see and respond to suspicious activity during market stress.

What the CLARITY Act Probably Won’t Do

The Oct. 10 event was heavily tied to perpetual futures leverage, unified/cross margin, and the fact that crypto trades 24/7 without the circuit breakers and halts common in traditional markets.

The CLARITY Act is primarily a market structure + spot/intermediary oversight framework. Based on the CRS overview, it doesn’t read as a direct “leverage cap” or “mandatory circuit breaker” bill.

So even with CLARITY, a macro shock could still trigger a sharp drawdown, especially if leverage remains concentrated in products/venues outside the bill’s practical reach.

Risks Under Scrutiny Ahead of the January 15 CLARITY Act Markup

As the January 15 markup approaches, one of the central questions facing lawmakers is whether the CLARITY Act’s push for regulatory certainty could introduce new enforcement and national security risks if key safeguards are not clearly defined.

• Critics of the bill have cautioned that market structure clarity alone does not automatically translate into effective oversight. In particular, concerns have been raised about whether all crypto-related activities that facilitate value transfer, including certain decentralized or hybrid models, would be subject to consistent AML and sanctions compliance obligations.
• Another area of focus is regulatory perimeter risk. By drawing formal boundaries around which entities qualify as regulated intermediaries, the legislation could inadvertently encourage regulatory arbitrage, where firms structure operations to fall just outside the scope of U.S. oversight while still serving American users. This risk is amplified in a global digital asset market where jurisdictional lines are easily blurred.
• National security considerations are also part of the debate. Policymakers and enforcement experts have emphasized that digital assets can be exploited to move funds across borders with speed and opacity, making sanctions enforcement and financial intelligence gathering more complex. 

If compliance responsibilities are unevenly applied, the burden on regulators and law enforcement agencies could increase rather than decrease.

What Happens to the CLARITY Act After the January 15 Markup?

If the Senate Banking Committee advances a version, the bill still has steps before it becomes law:

1. Committee approval (and potentially parallel committee work in other relevant committees, depending on the Senate’s approach).
2. A Senate floor vote (timing depends on leadership and bipartisan support).
3. Reconciling House vs. Senate text (conference or negotiated alignment).
4. Final passage and then presidential signature.

In other words: January 15 is a gate, not the finish line, but it’s a gate the bill must pass through.

Which Crypto Stakeholders Should Care Right Now?

If you’re in any of these groups, January 15 is directly relevant:

• Exchanges and brokers: Registration requirements, trading standards, customer protections.
• Token projects: Classification framework, disclosure expectations, secondary market implications.
• Institutional Investors: Reduced regulatory ambiguity, market integrity standards, custody clarity.
• DeFi builders: Definitions of intermediaries and how obligations are assigned.
• Everyday Users: Consumer protection rules and how platforms handle customer assets.

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About the Author

Onkar Singh

Onkar Singh has three years of experience as a digital finance content creator. Throughout his career, he has collaborated with various DeFi projects and crypto media outlets. In his leisure time, he enjoys fitness activities at the gym and watching movies across different genres. Balancing his professional and personal interests, Onkar continues to contribute to the digital finance landscape while pursuing his hobbies.

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