Original Title: "CLARITY Review Suddenly Postponed—Why Is the Industry So Divided?"

Original Author: Azuma, Odaily Planet Daily

On January 15, Beijing time, the cryptocurrency market structure bill (CLARITY), which was about to undergo its first Senate hearing, encountered unexpected developments. American journalist Eleanor Terrett, who has long tracked cryptocurrency legislative processes, revealed that...Due to market controversy triggered by Coinbase's sudden opposition to CLARITY, the U.S. Senate Banking Committee has canceled the scheduled markup of CLARITY, which was originally set for 10:00 AM ET on January 15 (11:00 PM Beijing time tonight). A new markup date has yet to be determined.

· Odaily Note: Regarding the CLARITY bill, the Senate Agriculture Committee (the primary oversight committee for the CFTC) had previously planned to hold a hearing on January 15 simultaneously with the Senate Banking Committee (the primary oversight committee for the SEC). However, the Senate Agriculture Committee later postponed its hearing to January 27. The Senate Banking Committee had continued preparing according to the original schedule, but this morning, just before the hearing, it also suddenly postponed the session.

Introduction to CLARITY (skip if familiar)

Last week, in our article "The Biggest Variable in the Future of Cryptocurrency: Can the CLARITY Act Pass the Senate?" we thoroughly analyzed the content, significance, and progress of the CLARITY Act.

In short, CLARITY aims to clearly distinguish the classification of digital assets and delineate the regulatory responsibilities of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), thereby establishing a clear and functional federal regulatory framework for the U.S. digital asset market, addressing long-standing issues of regulatory ambiguity and inconsistent enforcement.

For industry participants, the implementation of CLARITY will signify a substantial shift in the regulatory environment, meaning that there will be a more predictable compliance path in the future. Market participants will be clearly informed about which activities, products, and transactions fall under regulatory oversight, thereby reducing long-term regulatory uncertainty, lowering litigation risks and regulatory frictions, and attracting more innovators and traditional financial institutions to enter the market.

With respect to cryptocurrencies themselves,The implementation of CLARITY is expected to promote cryptocurrencies as an "asset class more accessible to traditional capital allocation" by addressing institutional uncertainties. This will provide long-term capital, which previously could not enter the market, with a compliant entry pathway, thereby raising the overall market's valuation floor.

The industry is highly divided.

Clearly, the cryptocurrency industry has placed great hopes in CLARITY regarding the future regulatory environment.However, as the review approached, major companies in the industry expressed markedly different attitudes.

This morning,A major force in cryptocurrency legislative lobbying, Coinbase, has clearly stated that it will oppose the current version of the CLARITY Act.

Coinbase founder Brian Armstrong posted, saying thatThe bill, as currently written, is worse than the status quo. Better to have no bill than a bad one.— "The bill has significant issues regarding DeFi and stablecoin rewards. Some provisions may grant the government unrestricted access to personal financial records, compromising user privacy and potentially stifling the reward mechanisms of stablecoins."

At the same time, other industry representatives such as a16z, Circle, Kraken, and Ripple have expressed concerns about the current version of CLARITY.Supportive attitude.

a16z's star partner Chris Dixon (a leading advocate of the Web3 narrative) explained: "Cryptocurrency developers need clear regulations... Essentially, this bill is intended to achieve that purpose.""It is not perfect and will require some modifications before it becomes official law, but now is the best time to advance CLARITY if we want the United States to continue being the best place globally for building the future of cryptocurrency."

Arjun Sethi, Co-CEO of Kranken, explained that legislation regarding market structure is inherently complex, and friction is inevitable. The existence of unresolved legacy issues does not mean the efforts have failed, but rather indicates that we are working on the most challenging aspects...Giving up now would only lock in uncertainty, leaving U.S. companies to operate in a murky environment while the rest of the world moves forward.

What are the flaws in the current version of the bill?

From the statements of the parties mentioned above, it is evident that both sides—whether Coinbase, which firmly opposes it, or a16z and Kraken, which have temporarily chosen to support it—share some common ground in their attitudes toward the current version of CLARITY.All parties acknowledge that the current version of the bill is not perfect and has certain flaws.The difference lies in the fact that Coinbase chose a more aggressive stance of resistance, directly labeling it a "bad bill," while a16z and Kraken opted for a more conservative approach, using milder terms such as "imperfect" and "outstanding issues" in their wording.

In fact, disagreements surrounding the CLARITY Act have long existed. After passing the House on July 17 last year, the bill was originally scheduled for Senate review in the middle of last year, but was then postponed to October, then further delayed until the end of last year, and then pushed back to 2026. It seems it will have to be delayed further yet again.

We mentioned in the previous article that,The disagreements surrounding CLARITY mainly focus on issues such as DeFi regulation, stablecoin yields, and ethical standards of the Trump family.

Regarding the ethical standards of the Trump family, Jake Chervinsky, Chief Legal Officer at Variant and one of the most active lawyers in the industry, explained that although many Democrats have stated they would vote against CLARITY if no restrictions are imposed,However, since moral issues fall outside the jurisdiction of the Senate Banking Committee, the review hearing could not address this matter, so this disagreement is not the current point of contention.

· Odaily Note: This issue will certainly become a key point of attack by Democratic senators during the future full Senate deliberation.

As for other core disagreements, Jake Chervinsky breaks them down into five more specific points, as listed below.

The GENIUS Act passed last year banned interest-bearing stablecoins, a compromise made to secure banking industry support at the cost of stifling an entire category of innovative products.

However, the banking industry remains dissatisfied with this provision and is attempting to overturn and revise it in CLARITY. This is because while GENIUS stipulates that stablecoin issuers cannot pay "any form of interest or returns" to holders, it does not restrict third parties from offering returns or rewards. However, the current Section 404 of CLARITY prohibits even third parties from providing such returns.If the current version of the bill is passed, holding stablecoins will not generate any returns or rewards. Incentives can only be obtained through activities such as making payments.

Jake Chervinsky criticized the proposal, stating that limiting the returns or rewards on stablecoins lacks sound policy justification and would only harm U.S. consumers, the international status of the dollar, and U.S. national security. Banks are strongly advocating for this change because major banks earn over $360 billion annually from payment and deposit services, and interest-bearing stablecoins would directly threaten these profits.

Last year, SEC Chair Paul Atkins launched Project Crypto, aiming to upgrade the financial system by migrating it onto the blockchain. However, Section 505 of CLARITY appears to hinder this goal by stripping the SEC's authority to treat crypto assets fairly.

Paul Atkins once emphasized the "innovation exemption,"Article 505 further stipulates that the fact that a security is issued on a blockchain cannot exempt or modify any securities regulatory requirements, nor can it exempt any person from registration obligations for this reason.

This may be the most important part of CLARITY, providing builders with a clear path to issue tokens without fear of SEC enforcement for issuing "unregistered securities."

Title 1 of CLARITY addresses this path. It is clear but neither simple nor inexpensive. Title 1 requires extensive disclosure for many entities, which is theoretically a good idea, but the problem lies in the details—Title 1 imposes extremely burdensome, equity-tier disclosure requirements, with little difference from those imposed on publicly traded companies—including audited financial statements. This system is suitable for established companies but not appropriate for startups.

This is just one of many details. The first part also requires builders to obtain approval from the SEC for each token; the obligation for information disclosure must be maintained for a long time after issuance; the maximum limit for public fundraising is $200 million, and so on.

By comparison, the creators might as well go directly to overseas listings or simply issue stocks altogether.

Developers of non-custodial software are not financial transfer institutions and should not be burdened with user KYC obligations at all—this should be uncontroversial.

However,Title 3 of CLARITY repeatedly implies that regulators may extend their oversight into the DeFi sector. These provisions must be removed or revised.

Regulated financial institutions have always been reluctant to engage with DeFi due to compliance concerns.

Clause 308 of CLARITY aimed to address this issue but made a critical mistake—it imposes additional burdens on entities, making it even more likely to drive them away from DeFi than the current situation.

Radicals and Conservatives

Based on Jake Chervinsky's breakdown of several key issues in the current version of the CLARITY Act, it's not hard to understand why Coinbase, a16z, Kraken, and others all agree — this is not a perfect bill.

Faced with a bill hiding hidden dangers,As representatives of the cryptocurrency industry, Coinbase shares fundamental interests with a16z and Kraken, but there are differences in the approaches they take to pursue these interests.

Coinbase has adopted a more aggressive stance in its resistance.Its core logic lies in the fact that if CLARITY is passed with provisions unfavorable to the industry—even if vaguely worded—these could be significantly amplified in enforcement, potentially creating long-term suppression of innovation. As for the subsequent costs and political resistance involved in revising the law, they may in fact far exceed the cost of enduring the current regulatory uncertainty.

Institutional players such as a16z, Kraken, and Circle have adopted a more conservative and "realistic" approach.In their view, the biggest problem with the long-standing stagnation of U.S. crypto regulation is not that "the rules are not good enough," but rather that there are no rules at all. CLARITY may have flaws, but it at least provides a legislative starting point that can be revised, negotiated, and incrementally improved. Once CLARITY is officially implemented, the U.S. crypto industry will, for the first time, have a unified federal framework. Subsequent adjustments and refinements to specific provisions will then have much more room for practical implementation.

There is no simple right or wrong here,The core of the conflict between the two sides actually lies in whether the bill should be advanced under the current version, and how much compromise should be made in the process.There is also no so-called "internal quarrel within the industry" here. Both parties share the same ultimate goal of making CLARITY better; they simply chose different strategic approaches in their competition.

As Jake Chervinsky said, "Whether for better or worse, this text will undergo significant changes before it officially becomes law. I hope it evolves in a better direction."

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