Crypto BETRAYAL!! Coinbase KILLS The CLARITY Act!!

Hello and welcome to Coin Bureau's official podcast channel.

My name is Guy and if you're seeking unbiased in-depth information about Bitcoin,

cryptocurrencies, Web3, and all manner of related topics,

then you've come to the right place. I hope you enjoy today's episode.

The holy grail of U.S. crypto regulation was just hours away from a historic vote.

For years we've been told that regulatory clarity was the missing piece of the puzzle.

The one thing holding back the tidal wave of institutional capital.

The one thing that would finally end the SEC's war on crypto and send us to the moon.

Everyone in DC and everyone in crypto had the 15th of January circled on their calendars.

It was supposed to be the day the Clarity Act moved out of committee and onto the Senate floor.

But then the industry itself pulled the plug.

In a twist that few saw coming, one of the biggest players in crypto looked at the bill

they'd spent millions of dollars lobbying for and said, no thanks.

So what exactly happened in those final 48 hours? Did the banks sabotage the bill?

Did the politicians try to slip in a Trojan horse?

Or did the crypto industry just realize that clarity came at a price they weren't willing to pay?

This is the story of how Washington almost codified a catastrophe

and why the regulatory vacuum might be here to stay.

My name is Guy and this is the coin bureau.

Okay, now before we begin you need to know that I'm not a financial advisor

and nothing in this video is financial or investment advice.

This is educational content intended to help you navigate the absolute circus that is capital hill.

If that sounds good then go ahead and punch that like button like it just tried to ban your

stablecoin yield and let's get into it.

So to understand why this collapse is such a big deal we first have to set the stage.

We're in January 2026.

The crypto market has been holding its breath for the Digital Asset Market Clarity Act

or just the Clarity Act.

After the Genius Act was signed into law last year which finally gave us a framework for payment

stablecoins the Clarity Act was supposed to be the big one.

This was the market structure bill and the goal was simple.

End the turf war between the SEC and the CFTC.

For most of the last five years we lived in a world where Gary Gensler claimed that everything

except Bitcoin was a security. The Clarity Act was supposed to fix that by introducing the

concept of a mature blockchain. Basically if a network could prove it was decentralized meaning

no single person or group controlled more than 20% of the tokens or voting power then it would

be classified as a digital commodity under the jurisdiction of the CFTC rather than the SEC.

This was the holy grail. It meant that truly decentralized crypto projects could finally

operate without the constant threat of a well's notice.

Senate Banking Committee Chairman Tim Scott had been working on this for months.

The White House wanted it, the crypto industry wanted it. It looked like a done deal but then

came the midnight amendments. Later on Monday night the 12th of January just three days before

the scheduled vote. Senator Scott's office released a 278 page amendment to the bill.

Now in Washington they call this a Managers Amendment and it's supposed to be a cleanup of

the text fixing typos and clarifying language. But when the lawyers at Coinbase, Kraken and A16Z

started reading the fine print they realized this wasn't a cleanup.

It was a rewrite and it was filled with poison pills.

The first poison pill was a day facto ban on tokenized equities.

Now for the last year the narrative for 2026 has been real world assets.

We've been talking about tokenizing stocks, bonds, real estate and much more besides.

Coinbase had publicly stated that their strategy for 2026 involved launching a market

for tokenized stocks. But the new text of the Clarity Act effectively said that you cannot

trade a token that represents a security on a blockchain. Just think about that.

The technology that promises to make markets more efficient, instant and transparent

was about to be banned from touching the stock market. It's a bit like banning the internet

from being used for mail because the post office exists. But that wasn't even the worst part.

What? The second poison pill was a direct attack on your wallet and a massive gift to the

traditional banks. We know that the banking lobby has long been terrified of stablecoins.

Why is that? Well, because right now you can hold USDC or USDT and on some platforms

earn 4 or 5% yield. Banks hate this because they want you to keep your money in one of their

crappy savings accounts earning 0.01% so they can lend it out at 7%.

Now, the Genius Act last year banned issuers like Circle from paying interest. But the new Clarity

Amendment expanded that ban to everyone. It aims to prohibit crypto exchanges and platforms from

passing any yield onto customers simply for holding stablecoins. Coinbase CEO Brian Armstrong

called this out specifically. He said it was a provision design to quote, allow banks to ban

their competition. If this bill were to pass with this provision, then the crypto industry would lose

one of its best user acquisition tools and the banks would maintain their monopoly on interest.

It's a classic case of attempted regulatory capture. And finally, we have the third poison pill,

new powers for the Office of Foreign Assets Control or OFAC targeting DeFi.

The amendment included language that would force DeFi frontends, the websites you use to interact

with, say, Uniswap or Aave, to comply with strict sanctions screening and anti-money laundering rules.

Now, on the surface, stopping money laundering sounds good. But in practice, this language was so broad

that it could require a decentralized exchange to collect your name, address, and social security

number before you could even connect your wallet. It would effectively turn DeFi into

CFI with extra steps. It would kill the privacy and permissionless nature that makes this technology

valuable in the first place. So, you have a bill that seeks to ban tokenized stocks,

kill stablecoin yield, and surveil DeFi. And this is where things got interesting.

Because, despite all of this, some parts of the crypto industry still wanted to push ahead.

There was a rush to vote. Leadership in the Senate wanted to jam this bill through

before the 2026 mid-term election cycle took over. They figured that a bad bill was better

than no bill and that they could fix it in post. But one company decided that the price was too

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where you can see all of our vetted partners. And now, back to the drama. So, on Tuesday,

the 14th of January, less than 24 hours before the markup, Coinbase walked. Brian Armstrong

posted a thread on X that effectively nuked the bill. He said, quote, we'd rather have no bill

than a bad bill. And this was the turning point. Now, you have to understand the power dynamics here.

Coinbase is the 800 pound gorilla of US crypto lobbying. They have spent millions trying to get

regulations passed. So, for them to publicly withdraw support was a massive signal to every

Republican on the committee. Armstrong specifically cited the ban on tokenized equities and the

stablecoin yield issue. He realized that if this bill passed, it would essentially outlaw Coinbase's

future business model. But here is where it gets really spicy. The industry was not united.

While Coinbase and A16z were slamming the bill for killing DeFi and privacy,

other players like Kraken and Ripple were reportedly trying to salvage it.

Ripple's CEO Brad Garlinghouse posted that, quote,

clarity beats chaos, implying that even a flawed bill was better than the endless lawsuits they've

been fighting for years. Kraken's co-CEO Argen Sethi argued that walking away now would leave

American companies in limbo while the rest of the world moves forward. So, we had a civil war.

On one side, the purists who refused to accept a bill that crippled innovation.

On the other side, the pragmatists who were desperate for any kind of legal shield.

But in the end, Coinbase's withdrawal was the final nail in the coffin. Why? Because the politics

didn't add up. To pass this bill, Senator Tim Scott needed 60 votes in the full Senate.

That meant he needed bipartisan support. But with the industry split, he lost the cover he needed.

Republicans started getting cold feet. They didn't want to vote for a bill that the biggest

crypto company in America was calling anti-innovation. They didn't want to be seen as handing a

win to the banks at the expense of the crypto industry, especially with a pro crypto White House

watching closely. Meanwhile, on the Democrat side, you had Senator Elizabeth Warren. Although,

she wasn't opposing the bill because it was too harsh, she was opposing it because she thought

it was too soft. She sent a letter to the SEC just days before warning that the bill didn't do

enough to protect consumers from quote, crypto predation. So, you had a situation where the

Republicans were bailing because the bill was too strict and the Democrats were bailing because

it wasn't strict enough. The center collapsed. On the evening of Wednesday, the 14th of January,

the Senate banking committee officially announced that the markup was postponed. They didn't say cancelled.

They said postponed. But let's be honest, in Washington, a postponement this close to an election

is often a death sentence. So, where does that leave us? Well, we're now back in the regulatory

vacuum and the market reaction was immediate. We saw volatility in Bitcoin and Ethereum

as traders realized that the regulatory pump wasn't coming. Without the clarity act, we're stuck

with the status quo. And as much as Brian Armstrong said the bill was worse than the status quo,

the status quo isn't exactly a picnic. It means we could be back to regulation by enforcement.

Even with a new administration, the SEC still has the authority to investigate and sue crypto

projects. The difference now is that there are no new rules to stop them. The innovation exemption

that SEC Chair Paul Atkins proposed is still just a promise. It's not law. And what about the

institutions? Remember, the whole point of this bill was to give big money the confidence to enter

the market. BlackRock, Fidelity, the pension funds, they all want legislative certainty.

With the bill in limbo, likely until after the midterms in November 2026 or even into 2027,

that institutional capital might stay on the sidelines a little longer. Or, and here's the cynical

take, they might just find a way to do it anyway. Remember, the poison pill about banks, the one

that allowed them to custody crypto without holding massive reserves? That was in the bill.

Now that the bill is stalled, the banks are technically still blocked by Sab 121 rules.

So in a weird way, the failure of this bill keeps the banks out of crypto for a bit longer.

But here is the real lesson from this week. In the rush for clarity, Washington almost codified

catastrophe. And the crypto industry proved something important this week. It, or at least some

elements of it, at least proved that it has a spine. For years, crypto has been begging for a seat

at the table. But when they finally got there and saw what was on the menu, a ban on defy, a ban

on yield, and a ban on tokenisation, they stood up and walked out. That is a sign of maturity.

It shows that the industry is powerful enough to kill bad legislation, even if it means waiting

longer for good legislation. Now, there is talk of another markup scheduled for the agriculture

committee on the 27th of January. But let's be real. Without the banking committee's support,

and without a unified industry, that session is looking like a dead man walking. The 2026 midterm

elections are looming. The legislative window is closing fast. If they can't fix the poison pills,

if they can't find a way to allow stablecoin yield and tokenised equities, then we might not see

a market structure bill until 2027 at the earliest. And do you know what? That might be okay.

Because if the alternative is a law that turns crypto into nothing more than a digital database

for the big banks, then maybe the Wild West isn't so bad after all. But I want to know what

you folks think. Did Coinbase make the right move by killing the bill or should they have taken

the deal to get regulatory clarity? Let me know in the comments below. If you want to know which

altcoins might actually survive this regulatory purge, then you can check out the video right over

here. And if you're wondering how the 2026 midterms could reshape the entire crypto landscape,

well, you can find out in the video over here. Okay, thank you all so much for watching and I'll

see you again very soon. This is Guy signing off. Hello Guy again. Before you go, if you have a

moment, please do rate and review us. It really helps the podcast grow and find new listeners.

Okay, that's all for this episode. Thank you for listening and see you again soon.