Coinbase pushes back as CLARITY Act heads to Senate floor — but cracks remain
Coinbase’s chief policy officer, Faryar Shirzad, is firing back at critics who say the CLARITY Act would undermine U.S. national security—arguing instead that the bill would move more crypto activity into a federal compliance framework and close gaps that bad actors exploit.
In a July 11 post on X, Shirzad said unclear rules have left room for illicit activity to operate “outside firm regulatory boundaries.” He framed the CLARITY Act as a tough compliance upgrade, not a carve‑out, noting the bill would subject crypto brokers, dealers and exchanges to Bank Secrecy Act (BSA) obligations: anti‑money‑laundering programs, customer due diligence, suspicious activity reports and sanctions compliance. Shirzad highlighted provisions allowing platforms to pause suspicious transfers at law enforcement request and summed up his view bluntly: “This isn’t a free pass for crypto.”
Senator Elizabeth Warren and other critics disagree. Warren shared an analysis by former National Security Council Iran director Richard Nephew and warned, “As currently drafted, the Clarity Act is a ticket to sanctions evasion.” Nephew and the senator argue that exemptions for some decentralized, non‑custodial services could leave enforcement holes that foreign governments, criminal groups or sanctioned actors could exploit.
What’s really at stake
At the core of the fight is a simple question: which crypto businesses must register, monitor transactions and answer to federal agencies? Supporters say the package leaves existing sanctions law intact while giving Treasury and FinCEN more tools; opponents say gaps for certain DeFi or non‑custodial services could make enforcement harder and create avenues for evasion.
Key CLARITY Act provisions supporters point to
- Apply federal AML/CTF rules to centralized digital asset intermediaries under the BSA.
- Create a Treasury power called Special Measure 6 to target foreign jurisdictions, institutions or transaction types tied to major digital asset money‑laundering risks.
- Increase FinCEN funding and require risk controls at digital asset firms.
- Establish a government‑industry information sharing program and regulate crypto kiosks.
- Mandate studies on mixers, illicit finance, cyber risks and national security threats.
Where negotiations stand
Senate staff plan to release a merged CLARITY Act draft the week of July 13, combining work from the Senate Banking and Agriculture committees. Negotiators have reportedly added more than 70 pages to address bipartisan requests, including stronger consumer protections.
Senate leaders are eyeing possible floor action the week of July 20, but several major issues remain unresolved: ethics rules, stablecoin reward mechanisms, DeFi exemptions, and legal safe harbors for software developers. Senator Ron Wyden has pushed to preserve protections for developers who do not control customer funds. The clock is tight: the Senate begins its August recess on August 7, which limits the time for debate and amendments.
Legislative posture and next steps
- The House approved an earlier version in July 2025.
- The Senate Banking Committee advanced its draft by a 15–9 vote in May 2026.
- Both chambers must approve matching text before the bill can reach the president.
Why this matters to crypto markets and policymakers
The CLARITY Act could sharply reshape compliance obligations for centralized crypto firms and give U.S. authorities new leverage to counter illicit finance linked to digital assets. But its treatment of decentralized services will likely determine whether it secures enough Democratic support to pass—turning the national security debate into a pivotal test as lawmakers race to finalize text before summer recess.
What to watch this week
- Release of the merged Senate draft and the new language added.
- How negotiators resolve DeFi/non‑custodial carve‑outs, developer protections and stablecoin issues.
- Whether the national security concerns raised by Warren and others shift enough votes to alter the bill’s direction.
We’ll monitor the merged text and negotiations closely as the Senate moves toward a possible floor vote.
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