Clarity Act stalls, US cryptocurrency regulation legislation faces renewed setbacks

The key moment of U.S. cryptocurrency regulation has been postponed again. The Senate Banking Committee’s scheduled line-by-line review meeting on January 15 was suddenly delayed at the last minute. This delay involves the Digital Asset Market Clarity Act (Clarity Act), which was supposed to be a milestone in U.S. cryptocurrency market regulation, but now faces stagnation on the eve of its passage.

Why the Clarity Act Sparks Industry Shockwaves

As an important piece of legislation aimed at establishing a cryptocurrency regulatory framework, the core goal of the Clarity Act is to clarify rules for market participants. However, on the eve of the review, Coinbase CEO Brian Armstrong openly announced on social media that support would be withdrawn, instantly causing a shock in the industry. Armstrong pointed out that the new draft contains multiple issues, including de facto restrictions on tokenized stocks, prohibitive clauses against decentralized finance (DeFi), expanded government access to personal financial records, weakened regulatory authority of the U.S. Commodity Futures Trading Commission (CFTC), and unreasonable restrictions on stablecoin yield mechanisms.

In Armstrong’s view, this bill, which was originally intended to streamline market order, will actually cause destructive impacts on the industry. Restrictions on tokenized stocks will hinder innovation in bringing financial assets on-chain, and the prohibitive clauses against DeFi violate the core values of decentralized finance.

Inability to Reconcile Multiple Interests Becomes a Key Obstacle

Senate Banking Committee Chairman and Republican Senator Tim Scott emphasized in a delay statement that the bill reflects months of serious consultation and coordination among both parties, gathering opinions from innovators, investors, and law enforcement agencies. However, this seemingly consensus-achieving result still harbors significant disagreements.

The core controversy over the bill centers on whether stablecoin yield mechanisms should be permitted. According to informed sources, opposition from the banking industry is stronger than expected, and Tim Scott even finds it difficult to guarantee full support from the Republican camp. This means that even within the same party, the Clarity Act cannot achieve a unified voice.

Hidden Political Conflicts

Beyond the industry and banking sector stances, political struggles between Democrats and the White House have also surfaced. Democratic lawmakers insist on adding strict ethical clauses to the bill, restricting high-level government officials from profiting from the cryptocurrency industry. This clause is interpreted by outsiders as targeting specific political figures and their families’ crypto holdings (such as the recently active World Liberty Financial project).

However, these ethical standards faced continuous resistance from the White House during negotiations, as they could impose constraints on the administration’s own cryptocurrency investments. Tim Scott ultimately stated that ethical issues should be handled by the Senate Ethics Committee, effectively sidelining this sensitive topic and temporarily easing direct partisan conflicts.

Huge Gap Between Industry Expectations and Reality

The cryptocurrency industry has invested heavily in political lobbying and donations over the years, hoping that the Clarity Act would mark a watershed moment for compliant regulation of cryptocurrencies in the U.S. However, this highly anticipated bill has now encountered serious setbacks just before crossing the finish line. Although the Senate Agriculture Committee’s related bill has been postponed until the end of the month for review, there remains a possibility of merging the two committees’ efforts. Nonetheless, the delay by the Banking Committee undoubtedly casts a shadow over the future of the Clarity Act, significantly increasing the uncertainty of U.S. cryptocurrency regulation legislation.