Key Insights
- The CLARITY Act seeks to end “regulation by enforcement” by dividing power between the SEC and CFTC.
- Coinbase has threatened to withdraw support if the bill bans profitable stablecoin rewards for users.
- A new “Mature Blockchain” status could legally exempt decentralised tokens from strict SEC security laws.
The United States now stands at a regulatory breaking point this January. Coinbase, the largest cryptocurrency exchange in the country, has moved from fighting for the passage of the H.R. 3633 bill (known as the CLARITY Act), opposing it. This bill passed the House last year with a strong bipartisan vote. Now, it is facing a tough journey through the Senate.
Related: US Senate Moves to Vote on the CLARITY Act This Month
The CLARITY Act Vision
The main goal of this bill is to stop the era of surprise lawsuits. For years, the SEC and the crypto industry have lived in a state of war. The CLARITY Act was proposed to fix this by creating a clear divide between the SEC and CFTC.
It tells the SEC exactly what it can regulate and gives the rest to the CFTC. This has been the “rulebook” that big investors have wanted for a long time. On January 12, a new version of the bill appeared in the Senate. Major committees will start marking up the text this week and new SEC Chair Paul Atkins has even added an “innovation exemption.” However, while this sounds great, a major fight is brewing.
The Fight Over Stablecoin Rewards
Coinbase has always been the loudest supporter of the CLARITY Act. However, that support now has a limit. According to reports, the exchange might walk away if the bill includes “reward restrictions.” For context, his part of the fight involves stablecoin rewards, or the yields that users earn for holding assets like USDC on the platform.
Meanwhile, traditional banks are lobbying hard for an amendment. They want only regulated banks to offer these types of interest accounts. They also claim platforms like Coinbase are acting like banks without following the same safety rules. For Coinbase, this is a “red line” issue. Notably, late last year, the company made nearly $700 million from these subscription and service fees. In other words, losing this revenue would be a massive blow for Coinbase during slow trading months.
Defining a Mature Blockchain
This part of the bill is a true game changer for blockchain developers and project teams. Under Section 205, a project can officially notify the SEC that its network is sufficiently decentralized. Moreover, if the SEC does not challenge this designation within a set timeframe, the token automatically becomes classified as a “digital commodity” and shifts regulatory oversight away from the SEC to the more friendly CFTC.
This provision provides greater regulatory certainty, encourages innovation, reduces legal risks for teams, and allows projects to operate with increased confidence in how they launch, grow, and maintain their decentralized networks.
A project must meet three main tests to be “mature.” First, no single person or group can own more than 20% of the coins. Second, the value must come from using the network, not from a central team.
Third, nobody can have special powers to change the code and Coinbase believes these rules will finally allow innovation to flourish in America.
The Shadow of the 2026 Midterms
Investors are wondering why the rush for the CLARITY Act is so intense right now, and the answer is the 2026 midterm elections. Currently, a small group of “pro-crypto” lawmakers now hold a majority. This means that if the House or Senate flips in November, the bill could die, be pushed to 2027 or rewritten with even worse rules.
A Turning Point for American Innovation
The next 90 days will be a turning point, and investors want to see if the US becomes a global hub for digital finance or stays stuck in legal limbo. For Coinbase, the CLARITY Act is the final step in becoming a fully regulated giant. It is their bridge from being a “rebel” to being a pillar of the financial space.
CEO Brian Armstrong has sent a clear message. He will not accept a “clear” framework if it kills the rewards that make crypto useful. Coinbase is also willing to gamble its political support to protect its business model. The result of this standoff will then set the tone for the entire industry.
Disclaimer: BFM Times acts as a source of information for knowledge purposes and does not claim to be a financial advisor. Kindly consult your financial advisor before investing.
