CLARITY Act Stalls in Congress, Signaling Positive Turn for Crypto Industry

The failure of the CLARITY Act to advance through the United States Congress is a win for the cryptocurrency industry, according to market analyst Michaël van de Poppe. The stalled crypto market structure bill had drawn criticism from major industry players over provisions that critics say would harm decentralized finance and digital asset markets.

Coinbase, one of the largest cryptocurrency exchanges in the US, withdrew its support for the CLARITY Act on Wednesday. CEO Brian Armstrong cited several concerns with the bill’s current form in an X post, including what he described as a “de facto ban” on tokenized stocks and prohibitions on yield-bearing stablecoins.

Armstrong also flagged government access to user records on decentralized finance platforms as a major issue. These provisions, he suggested, would undermine key features of the crypto ecosystem if enacted into law.

Van de Poppe said the bill’s failure to progress prevented significant damage to crypto markets. “I think if the bill were approved in its current form, it would have had a very bad impact on the markets in general,” the analyst stated. He noted that the stalled negotiations now allow all parties to continue discussions on a revised version.

The analyst drew parallels to the Markets in Crypto Assets (MiCA) regulatory framework adopted by the European Union. That comprehensive crypto regulation underwent several rounds of negotiations and revisions before lawmakers passed the final version into law.

Passing a crypto market structure framework remains a major policy objective for the US crypto industry and its Congressional allies. Both groups have pushed for clear regulatory rules governing onchain finance and digital asset trading.

Reports emerged Saturday that the White House had threatened to withdraw support for the CLARITY Act following Coinbase’s decision. However, Armstrong denied these claims, stating that negotiations between the crypto industry and community banks remain ongoing to draft an acceptable version of the bill.

Armstrong said the White House has been “super constructive” throughout the negotiation process. His comments drew responses from prominent crypto figures, including venture capitalist Nic Carter, who urged the industry to protect stablecoin yield features during ongoing discussions.

“Don’t let them kill stablecoin yield. That would set back stables for a generation. Hold the line,” Carter posted on X. The comment reflected broader industry concerns that restrictive regulations could slow adoption of stablecoins and decentralized finance protocols.

Industry observers view the CLARITY Act’s stall as an opportunity to reshape the bill into legislation that balances regulatory oversight with innovation. Multiple rounds of revisions are expected before any final version reaches a congressional vote.

Discover more from Dipprofit

Subscribe to get the latest posts sent to your email.

CLARITY Act Stalls in Congress, Signaling Positive Turn for Crypto Industry