The Clarity Act Has Stalled, Hitting Crypto Prices. What You Need to Know.

Crypto wants its way—even if it means near-term pain.

Fresh disagreements over how crypto should be regulated have undercut early 2026 “we are so back” vibes. While there was a rally in market prices earlier this week, that more recently has stumbled as the Clarity Act, legislation that seeks to create a regulatory framework for the industry, stalled in Washington.

The almost 300-page bill was a months-long work-in-progress set for a Senate Banking Committee markup hearing this week. That, however, was postponed after Coinbase (COIN) chief Brian Armstrong pulled his support, citing issues including language that would appear to put one of the company’s products at risk. Lawmakers, meanwhile, are debating an ethics issue that would restrict senior government officials, including President Donald Trump, from profiting from crypto.

Shares of crypto companies including Coinbase, Circle (CRCL), and Bullish (BLSH) took hits following the news, but appear to be recouping some ground Friday. Bitcoin and altcoins, including ethereum and solana, also gave back earlier week gains but are also moving higher.

“We’d rather have no bill than a bad bill,” Armstrong said on social media Wednesday evening. He listed issues with the draft bill, including what he called a “defacto ban on tokenized equities,” and “amendments that would kill rewards on stablecoins.”

A massive bill like the Clarity Act, which aims to delineate the roles of the Securities and Exchange Commission and Commodity Futures Trading Commission in regulating crypto, sets guidelines for stablecoins, and covers treatment of decentralized finance, or DeFi, and software developers, was likely to cause friction between various stakeholders and lawmakers.

One of the bigger issues Armstrong outlined has to do with stablecoins, which are cryptocurrencies pegged to fiat currencies. The GENIUS Act, a stablecoin-specific law passed last year, prohibited issuers like Circle from offering yield to customers but left open a loophole that would allow companies like Coinbase to provide them. The draft restricted rewards that resemble savings accounts after banks pressed lawmakers to address the issue, arguing that it would sap deposits and hurt smaller lending firms.

Arjun Sethi, co-chief of crypto exchange Kraken, disagreed with Armstrong that the Clarity Act “would be materially worse” than the current state of affairs. “Walking away would not preserve the status quo in practice,” Sethi said on social media Wednesday evening, expressing support for the bill.

Another point of contention: The bill would ban senior government officials from profiting on crypto ventures, which Sen. Tim Scott, chairman of the Senate Banking Committee, said was outside of his committee’s jurisdiction in an interview with CoinDesk, owned by crypto exchange Bullish, and would have to be addressed “at a later date.”

Given the scope of some of conflict, some crypto entrepreneurs have expressed doubt that the bill will pass this year, especially with an election ahead that will likely divert attentions. Others close to the subject think it’s not dead yet: Scott characterized the delay as a “brief pause” and saying “everyone remains at the table working in good faith.”