The fight over the CLARITY Act has turned into a very public showdown between Coinbase and Congress, and it will shape how everyday people buy, trade, and use crypto in the United States for years to come.
For retail investors, this is not just “D.C. drama” — it affects which coins you can access, where you can trade, and how much protection and freedom you have in the market.
What is the CLARITY Act in simple terms?
The CLARITY Act of 2025 (short for “Digital Asset Market Clarity Act”) is a major crypto market-structure bill that tries to finally answer a basic question: who regulates what in crypto — the SEC, the CFTC, or someone else.
Instead of asking, “Is this token a security?”, the bill introduces a new test for tokens based on how decentralized their network is.
- Highly decentralized networks (like mature layer-1s) would be treated as “digital commodities” under the CFTC.
- Early-stage or more centralized projects would be treated as “investment contract assets” under the SEC.
- Certain payment stablecoins would sit in a separate category with a tailored framework and shared oversight.
For years, retail investors have operated in a gray zone where the rules were unclear and regulators mainly relied on enforcement after the fact. The CLARITY Act is meant to replace that uncertainty with clear categories and pathways.
Why did Coinbase and Congress end up in a fight?
Initially, Coinbase and much of the U.S. crypto industry supported the House version of the CLARITY Act, which passed with bipartisan backing in mid‑2025.
That version aimed to simplify how companies show that certain tokens are not traditional securities, giving clearer rules for listings and trading.
The clash came when the Senate Banking Committee rewrote key parts of the bill. Coinbase then pulled its support, citing several concerns:
- Expanded government access and compliance obligations for some DeFi protocols, which Coinbase argued could undermine the open, permissionless nature of decentralized finance.
- Broader authority for the SEC in ways that Coinbase believes could bring back the same uncertainty the bill was supposed to solve.
- New stablecoin and banking provisions that, in Coinbase’s view, could tilt the playing field toward large banks and away from crypto‑native payment products.
In short, the company backed a version of the bill aimed at clarity and growth but objected when the Senate draft shifted toward heavier controls on DeFi and broader SEC powers.
What does this mean for you as a retail investor?
For retail users, the outcome of this fight will influence three key things:
- Access to tokens and products:
Clearer rules could make it easier for U.S. platforms to list more assets and offer products like staking or yield in a compliant way, instead of delisting out of fear of enforcement. A more restrictive version could do the opposite. Even if you aren’t based in the U.S., it’s more than likely that regulators around the world will follow U.S. regulations in some way, shape, or form. - Investor protections and transparency:
The CLARITY Act includes consumer-protection goals — like defining responsibilities to prevent market manipulation and setting standards for intermediaries. That can mean better disclosures and safeguards for everyday users. - Innovation vs. restriction in DeFi and stablecoins:
How Congress treats DeFi and stablecoins will determine whether U.S. users can access open, global protocols from domestic platforms or are pushed offshore to less regulated venues.
If the final law strikes a balance — allowing compliant innovation while protecting consumers — U.S. users could see more choice on regulated platforms, less confusion over which agency is in charge, and clearer tax and compliance expectations.
If the process stalls or tilts too far toward restriction, the U.S. could fall further behind regions like the EU, which already operate under frameworks such as MiCA.
What to watch next?
The CLARITY Act has passed the House but remains stalled in the Senate after the recent rewrites and pushback. The next steps will show whether lawmakers can agree on a framework that both major platforms and policymakers can support or whether the U.S. continues with case‑by‑case enforcement.
For retail investors, the takeaway is simple: regulation is coming either way — the question is whether it gives you more safe, compliant options onshore, or leaves the status quo of uncertainty and fragmented access in place.
