Senate Freezes CLARITY Act Vote as Crypto Giants Clash Over Stablecoins, DeFi and Market Rules

Key Takeaways:

• The U.S. Senate Banking Committee postponed the CLARITY Act markup as industry support fractures – with Coinbase stepping back while Ripple and a16z remain active in negotiations.
• The bill seeks to split jurisdiction between the SEC and CFTC, protect self-custody and tighten money-laundering rules but language on stablecoin yield and DeFi is still a flashpoint.
• Ripple CEO Brad Garlinghouse backs moving forward, saying clear rules beat chaos and issues can be fixed during the amendment process.

The Senate’s long-awaited crypto market structure bill has hit a speed bump. Lawmakers delayed a vote on the CLARITY Act this week to continue talks, highlighting ground fractures within the crypto industry over stablecoins, DeFi and regulatory reach.

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The Senate Banking Committee postponed its scheduled markup of the CLARITY Act, citing the need for more bipartisan talks. Chairman Tim Scott said lawmakers, regulators, and industry leaders remain “at the table” and are working in good faith to resolve outstanding issues. No new vote date has been announced.

Due to the Senate Agriculture Committee’s similar action on the CLARITY Act with regard to its interaction with the Commodities Future Trading Commission (CFTC), this delay impacts timing and alignments as both bodies must approve their respective bills before moving them forward to the Senate at large. 

The House has already sent its own version of the CLARITY Act through the legislative process as of July of this year. Nevertheless, there are procedural rules that the Senate Banking Committee has jurisdiction over SEC and the Agriculture Committee has jurisdiction over CFTC adding complexity and pressure to the task of putting together a single text.

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The postponement is caused by the fact that even the crypto sector itself is divided. Coinbase publicly withdrew support, with CEO Brian Armstrong arguing the draft would be “materially worse than the status quo.” He flagged concerns about stablecoin yield restrictions, tokenized equities, DeFi limitations, and privacy risks tied to government access to financial data.

On the contrary, Ripple, a16z Crypto, Coin Center, Kraken and The Digital Chamber have remained active. They state that unfortunate rules are superior to regulatory limbo and that points of weakness can be corrected with specific amendments.

Ripple CEO Brad Garlinghouse made his stance clear on X, backing the effort by Senator Tim Scott and the Banking Committee. He said the bill represents a “massive step forward” and stressed that clarity beats chaos. Garlinghouse added that Ripple will continue working through the markup process to resolve issues, signaling confidence that compromises are possible.

Venture firms have echoed that tone. a16z leaders said builders need clear rules to operate in the U.S. and urged lawmakers to refine the draft rather than stall. The message is consistent: delay risks pushing innovation offshore.

At its core, the CLARITY Act tries to end years of regulatory confusion by clearly defining which digital assets fall under securities law and which are commodities. The bill would:

• Allocate oversight between the SEC and CFTC
• Require disclosures for digital asset securities
• Preserve the right to self-custody
• Protect software developers who do not control user funds
• Strengthen anti-money laundering and sanctions compliance
• Create a joint SEC–CFTC advisory committee to align rules

The Senate Banking Committee released a “Myth vs. Fact” breakdown this week, pushing back on claims that the bill weakens investor protections or opens loopholes for bad actors. The committee argues the framework keeps fraud illegal, maintains SEC enforcement power, and introduces the strongest illicit finance controls Congress has considered for crypto.

It also says the bill does not criminalize developers or ban self-custody, and that it targets misconduct without stifling lawful innovation.

The most explosive issue is stablecoin yield. The draft restricts activity-based payments with stablecoins, which only applies directly to exchanges that reward users for holding stablecoins on their platforms.

Banking lobby groups have lobbied hard for these limits, warning of deposit flight and risks to shadow banking. Crypto firms push back that the restrictions could hobble legitimate products and hinder adoption. This clash is among the biggest reasons the discussions are dragging on.

There’s the matter of DeFi lingo, as well. Critics worry the bill could push decentralized protocols that weren’t designed for this kind of compliance into these frames.

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