Authors: Changan, Teddy, Amelia, Denise I Biteye Content Team
In early 2026, after five years of regulatory tug-of-war and hundreds of enforcement cases, the eyes of the global cryptocurrency market were fixed on Capitol Hill in Washington. This bill, named CLARITY, was originally intended to provide clarity for digital assets that had long been in a regulatory gray area, but at the last moment, it turned into an ultimate showdown between the old and new financial orders.
Today, we open this hundreds-page bill, not to parse legal jargon, but to explore: Why did Coinbase, which once led the charge in embracing regulation, "angrily turn against it" at the last minute? As a retail investor, how will these hundreds of pages change your wallet?
Background: The End of the Law of the Jungle
Before the birth of the CLARITY Act, crypto regulation in the U.S. was like a lawless land, with major players struggling in chaos:
- Civil War of the Dual Hegemony: Before CLARITY, the U.S. lacked a unified framework for crypto assets. The SEC (Securities and Exchange Commission) wanted to regulate tokens as stocks, the CFTC (Commodity Futures Trading Commission) wanted to regulate them as commodities. Projects caught in the middle never knew which one would come knocking tomorrow.
- The Fear of "Regulation by Litigation": Due to the lack of clear law, the SEC chose a simple and brutal path: "sue first, set rules later." Ripple and Coinbase were both deeply affected. Taking the Ripple case as an example, this lawsuit lasted over 3 years, directly impacting XRP's market capitalization fluctuations worth tens of billions of dollars, and became a psychological shadow for the entire industry. This directly led to a significant brain and capital drain to places like Singapore and Europe.
- Traditional Banks' Anxiety: Stablecoins offer an average annualized yield of 4.2%, far higher than traditional bank deposit rates, raising concerns over a potential monthly deposit outflow of over $20 billion. To protect their "money bags," banking lobbying groups urgently needed a set of laws to put a leash on cryptocurrency.
To end the chaos, this hundreds-page Clarity bill attempted to redefine market rules by:
1) Clarifying the regulatory body: Assets that are sufficiently decentralized and no longer rely on a single issuer (like Bitcoin) are regulated by the CFTC. Assets in early stages with obvious financing attributes are regulated by the SEC.
2) Integrating a stablecoin framework: Excluding "licensed payment stablecoins" compliant with the GENIUS Act from the securities definition, with their trading usage supervised by the CFTC/SEC, and issuance and reserve requirements referencing the GENIUS Act.
Ending regulatory infighting and giving the market a "predictable future." This is why companies like Coinbase, Ripple, and Kraken initially publicly supported CLARITY.
Until the Senate version appeared.
Baldy's "Last-Minute Betrayal"
The original version of the CLARITY bill was intended to be clear, attempting to redefine rules through three pillars: asset classification, financing regulation, and stablecoin access. However, in the Senate revised version in January 2026, the wind shifted suddenly, and the clauses became extremely harsh:
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Tokenization Ban: The Senate draft added clauses that essentially restrict the tokenized trading of traditional financial assets (like U.S. stocks, bonds) directly on public blockchains.
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RWA Exclusion: The bill explicitly excludes RWA (Real World Assets) from the definition of digital commodities, meaning they will be subject to extremely strict and inflexible securities law regulation, potentially even barring them from listing on CEXs.
This amendment triggered intense discussion within the industry. Coinbase CEO Brian publicly withdrew support for the bill,直言 (stating plainly) that the amended bill was worse than having no bill at all. The core objections were mainly three:
1. Strangling Stablecoin Rewards (The most direct conflict of interest)
Coinbase partners with Circle, allowing users holding USDC to earn about 3.5% rewards. This contributes significant revenue to Coinbase. Banking lobbies pushed hard for this clause because they fear depositors will move funds from banks into interest-bearing stablecoins.
2. The Ban on Stock Tokenization and RWA
Coinbase has always been bullish on Tokenization, seeing it as the future of finance. The new bill, through complex registration requirements, effectively bans the free trading of tokenized stocks on crypto infrastructure.
3. The End of DeFi
The bill requires almost all DeFi protocols to register like banks or brokers, granting the government high levels of access to DeFi transaction data. Brian Armstrong believes this violates user privacy and is technically infeasible.
How Will the Bill Affect Us?
The same bill presents drastically different scripts for different market participants.
1. Retail Investors: A Double-Edged Sword
Benefit: The bill mandates that CEXs must segregate customer funds, held by third-party custodians, preventing FTX-style tragedies at their root.
Drawback: Due to the 2026 amendment's protection of banks, retail investors may lose the 3%~5% interest on CEX-held stablecoins. Furthermore, the vision of ordinary people buying fractional shares (e.g., 0.01 shares of Tesla) on-chain will likely vanish into thin air due to RWA restrictions. Of course, this depends on whether the asset and CEX's region fall under the bill's jurisdiction.
2. Institutions: The Compliance Dividend
For institutions, this is 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, tens of billions of dollars in institutional funds will be allocated compliantly to digital commodities beyond Bitcoin and Ethereum, inevitably triggering a wave of applications for altcoin spot ETFs.
3. Project Teams: Mixed Fortunes
Projects defined as digital commodities will escape the clutches of the SEC; those defined as securities will face extremely heavy compliance reporting obligations and financing restrictions.
Additionally, the bill mandates lock-up periods for core team tokens, effectively curbing the恶习 (bad habit) of dumping at launch.
Fortunately, the bill explicitly protects non-custodial developers. If you merely write code and release open-source protocols without handling customer funds, you will not be considered a Money Transmitter. This protects pure technological innovation at the protocol level.
The Great Industry Debate: Consensus or Division?
Biteye has compiled the stances of industry KOLs & project teams regarding the latest revised bill.
AB Kuai.Dong @_FORAB (XHunt Rank: 1087)
Tweet Link: 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 unfavorable to crypto-native companies. Specific objections include restrictions on stablecoin rewards, increased costs for stock tokenization, and expanded government oversight of DeFi, potentially stifling innovation.
qinbafrank @qinbafrank (XXHunt Rank: 1533)
Tweet Link: https://x.com/qinbafrank/status/2011631328555647098
Viewpoint: Points out that the Senate Banking Committee canceled deliberations due to Coinbase's opposition, potentially causing a market correction. Opposition focuses include the "de facto ban" on tokenized equity, DeFi privacy invasion, weakening CFTC power, and eliminating the stablecoin reward mechanism, believing this will let the SEC dominate and suppress innovation.
Phyrex @Phyrex_Ni (XXHunt Rank: 765)
Tweet Link: 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, issues with SEC power boundaries, prohibition of interest-bearing stablecoins, and ethical conflicts of interest related to the Trump family.
PANews @PANews (XXHunt Rank: 1827)
Tweet Link: https://x.com/PANews/status/2011013801802686752
Viewpoint: Believes further delays will make the situation increasingly unfavorable. January is one of the few structural legislative windows available to the Senate. If it fails to make substantive progress, it can easily be "naturally squeezed out" by the overall legislative schedule. Also, if Democrats gain an advantage in the midterm elections, the probability of passage will be even lower.
Jason Chen @jason_chen998 (XXHunt Rank: 1082)
Tweet Link: https://x.com/jason_chen998/status/2012358494901694931
Viewpoint: Believes the conflict is essentially driven by the interests of various parties. For example, Coinbase publicly opposes it because the current version's ban on paying interest on stablecoins would directly cause Coinbase to lose $1 billion in annual revenue and significant user churn. Conversely, Ripple's CEO strongly supports the advancement of the CLARITY Act, also because the ban on stablecoin interest has little impact on Ripple.
Bitcoin Orange @chengzi_95330 (XXHunt Rank: 3508)
Tweet Link: https://x.com/chengzi_95330/status/2012136666912494037
Viewpoint: Points out that although the current bill is imperfect, a16z, Circle, Kraken, etc., are willing to continue pushing forward because they fear that if they walk away from the table now, the legislative window might shut completely. Coinbase, however, believes that if core issues like stablecoin yields cannot be included under the current crypto-friendly political climate, there will be absolutely no chance in a future, more anti-crypto political cycle. Thus, they are making a "historical judgment bet."
Brad Garlinghouse (Ripple CEO) @bgarlinghouse (XXHunt Rank: 1870)
Tweet Link: https://x.com/bgarlinghouse/status/2011559973818343785
Viewpoint: Expressed surprise at Coinbase's strong opposition, acknowledging Brian's concerns are reasonable but emphasizing that "the rest of the industry is still constructively supporting and working to solve problems." Garlinghouse stated Ripple is ready to advance under a compliance framework (e.g., XRPL tokenization), sees the bill as a step forward, and is unwilling to abandon the overall process due to disagreements.
Vlad Tenev (Robinhood CEO) @vladtenev (XXHunt Rank: 380)
Tweet Link: https://x.com/vladtenev/status/2011622052457783432
Viewpoint: Supports advancement. He reiterated Robinhood's support for Congress passing a market structure bill, acknowledged more work is needed (e.g., resolving staking restrictions in some states and stock tokenization availability), but sees a clear path and is willing to assist the Senate Banking Committee in completion. Emphasized the U.S. needs to lead crypto policy to unlock innovation and protect consumers.
Arjun Sethi (Kraken co-CEO) @arjunsethi (XXHunt Rank: 1941)
Tweet Link: https://x.com/arjunsethi/status/2011579807272759639
Strongly supports. He stated Kraken is fully committed to supporting the efforts of Tim Scott and Cynthia Lummis, criticized that "walking away easily or declaring failure is easy," but what truly matters is "continuing to show up, solve problems, and build consensus." Warned that giving up would exacerbate uncertainty and drive innovation overseas.
Retail Investor Risk Hedging and Opportunity Seizing: 2026 Action Guide
A rite of passage, a new beginning. Looking at the entire博弈 (game/contest) of the CLARITY Act, this is actually a "rite of passage" for the crypto industry. It marks cryptocurrency's formal leap from the fringe to the main stage of global finance.
Regulatory "clarity" itself is the most significant infrastructure. For retail investors, understanding and adapting to these new rules is key to protecting and growing assets in the coming years. Below are three practical, actionable plans we've outlined for you.
1. Re-evaluate Your Portfolio, Lean Towards "Digital Commodity" Assets
For crypto asset holdings, consider increasing the allocation weight of assets clearly classified as "digital commodities" (like Bitcoin, Ethereum, etc.) and mature blue-chip tokens within their ecosystems. Such assets will be the first to see large-scale compliant capital inflows from traditional institutions due to the elimination of regulatory uncertainty. Their spot ETFs and other products are also easier to approve, forming strong price support. Conversely, be extremely cautious with newly issued tokens that are likely to be classified as "securities." They will face harsh disclosure and financing restrictions, and their liquidity may dry up.
2. Reconfigure Stablecoin Strategy, Seek Alternative Yield Solutions
If you are in a region under Clarity's jurisdiction (e.g., the U.S.), since the bill may restrict CEXs (like Coinbase, Circle) from offering 3%~5% stablecoin rewards, consider moving funds to non-custodial on-chain DeFi protocols if the bill officially takes effect and causes compliant exchange interest to drop to zero. Although the bill strengthens regulation on DeFi, as long as the protocol itself is censorship-resistant, its native yield could become a safe haven.
3. Be Cautious with the RWA Sector, Beware of Liquidity Traps
Given the Senate revision's extremely harsh stance on RWA (Real World Assets), potentially even banning their listing on CEXs, if you currently hold a significant amount of tokenized U.S. stocks or bonds, be wary of liquidity drying up. Also, before the bill is finalized, do not blindly participate in tokenized traditional financial products that require high compliance and Know Your Customer (KYC) verification, as these products are most susceptible to being forced to shut down due to policy changes.
