Senate Scraps CLARITY Act Vote After Armstrong Torches Draft; COIN Slides 6%
A scheduled vote on the Digital Asset Market Clarity Act was cancelled Thursday after Coinbase CEO Brian Armstrong warned the bill’s stablecoin and DeFi provisions were “materially worse” than the status quo.
The Deal Breaker
The Senate Banking Committee abruptly halted its scheduled vote on the Digital Asset Market Clarity Act (CLARITY Act) Thursday, bowing to intense pressure hours after Coinbase CEO Brian Armstrong publicly rejected the proposal. The cancellation marks a major legislative failure for the current session, effectively pushing comprehensive crypto market structure reform into late 2026.
Markets reacted swiftly to the prolonged regulatory limbo. Coinbase (COIN) erased 6.48% to close at $239.28, while MicroStrategy (MSTR) dropped 4.70% to $170.91.
“Worse Than The Status Quo”
While the bill initially garnered support from Ripple CEO Brad Garlinghouse, who called it a “massive step forward,” the fragile industry coalition fractured Wednesday night. Armstrong issued a blistering critique of the committee’s latest draft, arguing it would enshrine a “de facto ban” on tokenized equities and hand the SEC unchecked authority over asset classification.
We appreciate the hard work… but this version would be materially worse than the current status quo. We’d rather have no bill than a bad bill. Brian Armstrong
The draft’s “poison pills” went beyond jurisdiction. The bill included provisions to eliminate rewards on stablecoins, a revenue stream vital to exchanges and neo-banks. Furthermore, Galaxy research head Alex Thorn noted the legislation represented the “most significant expansion of government financial surveillance since the Patriot Act,” specifically targeting DeFi interfaces with bank-like compliance mandates.
The Split
The bill’s collapse exposes a deepening rift in the crypto lobby. While Coin Center and Ripple signaled readiness to compromise for legal clarity, Coinbase and DeFi proponents refused to accept a framework that would suffocate stablecoin yields and decentralized protocols. With lawmakers hesitant to touch the divisive issue during an active campaign year, the legislative window has likely shut until the next Congress convenes.
