Written by: Changan, Teddy, Amelia, Denise I Biteye Content Team
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. This bill, named CLARITY, was originally 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.
Today, we open this hundreds-page bill, not to chew through the legal texts, but to explore: why did Coinbase, which once led the charge for regulation, suddenly "turn against" at the last moment? As retail investors, how will these hundreds of pages of paper change your wallet?
Background: The End of the Law of the Jungle
Before the birth of the CLARITY bill, cryptocurrency regulation in the U.S. resembled a lawless land, with major players struggling 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 the next day.
- The Fear of "Litigation over Regulation": Due to the lack of clear laws, the SEC chose a blunt approach: "sue first, regulate later." Ripple and Coinbase suffered greatly; for instance, the Ripple case has lasted over three years, directly affecting the market cap fluctuations of XRP worth tens 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 bill attempted to redefine market rules:
1) Clear Management Entities: Assets that are sufficiently decentralized and no longer rely on a single issuer (like Bitcoin) would be regulated by the CFTC. Assets that are in early stages and have obvious financing attributes would be regulated by the SEC.
2) Integration of Stablecoin Framework: Stablecoins that meet the criteria of the GENIUS Act would 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.
The "Midnight Turn" of the Bald Guy
The initial version of the CLARITY bill was clear in its intent, attempting to redefine rules through three pillars: asset classification, financing regulation, and stablecoin access. However, in the Senate's revised version in January 2026, the wind changed dramatically, and the terms became extremely harsh:
Tokenization Ban: The Senate draft added clauses that effectively restricted the direct tokenization of traditional financial assets (like U.S. stocks and bonds) on public chains.
RWA Exclusion: The bill explicitly excluded RWAs from digital commodities, meaning they would be subject to extremely strict and inflexible securities law regulation, potentially preventing them from being listed on CEXs.
This revision sparked intense discussions within the industry, with Coinbase CEO Brian publicly retracting his 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% in 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-bearing stablecoins.
2. A 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 version of the bill, through complex registration requirements, effectively prohibited 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 access to DeFi transaction data. Brian Armstrong believes this infringes on user privacy and is technically unfeasible.
How Will the Bill Affect Us?
The same bill presents entirely different scenarios for different market participants.
1. Retail Investors: A Double-Edged Sword
Pros: The bill mandates that CEXs must isolate customer funds and use third-party custodians, fundamentally preventing tragedies like FTX.
Cons: Due to the 2026 amendment's protections for banks, retail investors may lose 3% to 5% of interest on CEX-held stablecoins, and with RWA restrictions, the vision of ordinary people buying fractional shares (like 0.01 shares of Tesla) on-chain may also vanish. Of course, this depends on whether the assets and CEXs fall under the jurisdiction of the bill.
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, inevitably triggering 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 entanglements; 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 teams, effectively curbing the bad habit of price dumping at launch.
Fortunately, the bill clearly protects non-custodial developers. If you are merely writing code and publishing open-source protocols without touching customer funds, you will not be considered a Money Transmitter, thus protecting pure technical innovation at the protocol level.
Industry Debate: Consensus or Division?
Biteye has summarized the positions of industry KOLs and projects regarding the latest revised bill.
AB Kuai.Dong @_FORAB (XHunt Ranking: 1087)
Tweet link: https://x.com/_FORAB/status/2011710073933095037
Viewpoint: Reports on Coinbase's sudden turn, 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)
Tweet link: https://x.com/qinbafrank/status/2011631328555647098
Viewpoint: Points out that the Senate Banking Committee canceled its review due to Coinbase's opposition, which may 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 @Phyrex_Ni (XHunt Ranking: 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, SEC power boundary issues, and ethical conflicts of interest regarding the Trump family.
PANews @PANews (XHunt Ranking: 1827)
Tweet link: https://x.com/PANews/status/2011013801802686752
Viewpoint: Believes that delays in the proposal will become increasingly unfavorable. January is one of the few available structural legislative windows for the Senate; if substantial progress is not made, 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 @jason_chen998 (XHunt Ranking: 1082)
Tweet link: https://x.com/jason_chen998/status/2012358494901694931
Viewpoint: Believes the essence of the conflict is driven by the interests of various parties, such as Coinbase's public opposition 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 exodus, while Ripple's CEO strongly supports the advancement of the CLARITY bill because the ban on stablecoin interest does not significantly impact Ripple.
Bitcoin Orange @chengzi_95330 (XHunt Ranking: 3508)
Tweet link: 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 forward because they fear 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, they will have no chance in a future more anti-crypto political cycle, so they are making a "historical judgment bet."
Brad Garlinghouse (Ripple CEO) @bgarlinghouse (XHunt Ranking: 1870)
Tweet link: https://x.com/bgarlinghouse/status/2011559973818343785
Viewpoint: Surprised by Coinbase's strong opposition, believes Brian's concerns are valid but emphasizes that "the rest of the industry is still constructively supporting and working to solve issues." 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)
Tweet link: https://x.com/vladtenev/status/2011622052457783432
Viewpoint: Supports the 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)
Tweet link: https://x.com/arjunsethi/status/2011579807272759639
Strongly supports. He stated that Kraken is fully committed to supporting the efforts of Tim Scott and Cynthia Lummis, criticizing that "walking away or declaring failure" 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.
Retail Investors Hedging and Gold Mining: 2026 Action Guide
A coming-of-age ceremony, a new beginning. Throughout the game of the CLARITY bill, this 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 biggest 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 realistic and actionable strategies 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 likely see a massive influx of compliant funds from traditional institutions as regulatory uncertainty is eliminated, and products like spot ETFs will be easier to approve, thus forming strong price support. Conversely, exercise extreme caution with newly issued tokens that are likely to be classified as "securities," as they will face stringent disclosure and financing restrictions, potentially leading to liquidity drying up.
2. Reconfigure Stablecoin Strategy, Seek Yield Alternatives
If users are in regions governed by Clarity (such as the U.S.), the bill may limit CEXs (like Coinbase, Circle) from providing 3% to 5% stablecoin rewards. If the bill is formally enacted and leads to zero interest on compliant exchanges, consider transferring funds to non-custodial on-chain DeFi protocols. Although the bill strengthens regulation on DeFi, as long as the protocol itself is resistant to censorship, its native yields may become a safe haven.
3. Approach RWA Track Cautiously, Beware of Liquidity Traps
Given the Senate's revised version shows an extremely harsh attitude towards RWAs (real-world assets), it may even prohibit their listing on CEXs. If you currently hold a large amount of tokenized U.S. stocks or bonds, be wary of liquidity exhaustion 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.
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