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Last week, as I followed Coinbase’s resistance to the Clarity Act, I kept hearing a common concern from anxious insiders in DC: The crypto industry is running out of time to push through a bipartisan market structure bill that could actually yield positive results for them. With midterm elections approaching, Congress will soon dive into campaign mode, sidelining policymaking and bipartisanship in favor of reelection priorities. Simply put, personnel changes are on the horizon, and those new faces may not be as supportive of the crypto sector.
From a political angle, Democrats are likely to gain significant power while Republicans may see theirs dwindle. Historical trends support this: In 90 percent of midterm elections over the past 80 years, the incumbent president’s party has lost seats in the House. All presidents since Bill Clinton have experienced losses in both the House and Senate during the initial two years of their term. Midterms often serve as a referendum on the sitting president, meaning a drop in popularity typically leads to losses for their party.
Given this pattern, Coinbase is making a substantial bet: they hope crypto-friendly allies will remain in Congress, backed by Republicans under President Donald Trump, while fearing the likes of Rep. Maxine Waters (D-CA) or Sen. Elizabeth Warren (D-MA) might gain the upper hand. They even had two representatives advocating for them: White House AI and crypto director David Sacks and Eric Trump, who claimed at the World Economic Forum in Davos, Switzerland, that the banking industry was responsible for Clarity’s stagnation.
Then, on Saturday, a tragic event unfolded as ICE agents shot an ICU nurse in broad daylight during an anti-ICE protest in Minneapolis. The nation erupted in outrage, shifting political dynamics in the U.S. Capitol and pushing policy discussions aside.
In response to Alex Pretti’s death and the ongoing presence of ICE in Minneapolis, Senate Minority Leader Chuck Schumer (D-NY) announced that Democrats would not support any budget that continued funding ICE at the Department of Homeland Security. This could lead to a partial government shutdown. Crucially, several moderate Senate Democrats, including Sen. Patty Murray (D-WA), retracted their support. Initially pushing for the bill, Murray reversed her stance on Sunday, asserting, “Federal agents cannot murder people in broad daylight and face zero consequences,” on X.
Partisanship is already creeping into the Clarity debate, noted Cody Carbone, CEO of The Digital Chamber, a leading trade association for the digital asset and blockchain industry in Washington. Most opposition to the latest Clarity draft has emerged from Democrats, accompanied by two Republicans from states with strong banking interests. Carbone expressed concern that Pretti’s death might push both parties towards a more hardline stance in the Senate and House, where the bill would face renewed scrutiny.
“Crypto holders are incredibly passionate about the industry. They’re single-issue voters and often vote with their wallets,” he emphasized, noting that while they generally align with Democratic views, they predominantly vote Republican, perceiving the latter as more favorable to crypto. “Considering the political donations from the crypto sector last election and the enthusiasm among crypto voters, their votes can sway elections.”
This week, the Senate Agriculture Committee, responsible for regulating commodities, will meet on Thursday to review the Clarity Act. Meanwhile, the Banking Committee, which oversees securities, appears to be at an impasse. Carbone and I discussed the latest whispers among crypto lobbyists, which Senators are being courted by banks, and the worst-case scenarios (for the industry) should Democrats secure control of either chamber before Clarity is enacted. “I suspect there will be numerous subpoenas aiming to investigate the Trump family’s crypto dealings,” he warned. “There won’t be much interest in passing crypto legislation that would promote adoption.”
“I grew up with Alex Pretti,” wrote Kristen Radtke: The warm-hearted ICU nurse shot by federal agents was my childhood best friend.
“The day of the second killing,” Gaby del Valle reported: After Alex Pretti was shot, photographer Steven Garcia documented peaceful protesters enduring tear gas from ICE agents.
“It doesn’t matter if Alex Pretti had a gun,” asserted Sarah Jeong: What’s the point of law enforcement failing to uphold the law?
“Why won’t anyone stop ICE from masking?” pointed out Sarah Jeong: Doxxing isn’t a valid reason for faceless police.
“Creators and communities everywhere take a stand against ICE,” reported Terence O’Brien: Even the most seemingly apolitical creators are fed up.
“Even the big dick subreddit is mad about ICE,” noted Mia Sato: After immigration agents killed a second person in Minneapolis, anti-ICE sentiment has infiltrated every corner of the internet — including adult subreddits.
“OpenAI’s president is a Trump mega-donor,” reported Hayden Field: Greg Brockman indicated he began ‘getting involved politically’ in 2025.
“2026 is the year of social media’s legal reckoning,” stated Lauren Feiner: The first wave of cases against tech companies for failing to protect children will be tried this year.
“The great e-bike crackdown has begun,” warned Andrew J. Hawkins: New Jersey just adopted a misguided law that overly restricts all e-bikes, raising concerns that other states might follow suit.
“Hang on, there’s a Trump Phone Ultra coming too?” posed Dominic Preston: While we await the first Trump Phone, an exec from Trump Mobile hinted at a high-spec version in development.
“I think we’ll regret it if Democrats gain Congress, and we miss out on opportunities,” Carbone added.
Let’s break down what’s causing the bill to stall.
The main issue currently hindering the bill is whether stablecoin issuers will continue to provide rewards to consumers. For example, if you’re on Coinbase holding USDC, you receive 3.5 percent in rewards from your holdings.
Is that like a cashback program or an interest payout? Essentially, it’s more like an interest payment. The banking lobby is particularly outraged by this, fearing that if stablecoin issuers or third parties, like exchanges, pass interest onto consumers, it could lead to a mass exodus from traditional banks, which currently offer minuscule interest rates.
Right now, under the GENIUS Act, offering rewards isn’t prohibited, while yields are. The banking sector labels this as a loophole. There’s nothing stopping banks from providing their own rewards or higher interest rates, but this is the sticking point in the market structures at play. The banking industry is adamant that the only way to curtail stablecoin issuers (or anyone transferring stablecoin rewards) is to include it in market structure legislation, so they’ve lobbied intensely for a complete ban on these rewards.
This is Coinbase’s primary issue and the main reason the Senate Banking markup did not proceed two weeks ago. There wasn’t sufficient consensus among Republicans or, especially, between Republicans and Democrats, and the crypto industry about how to tackle this problem.
How much could Coinbase potentially lose if this provision is enacted? It would significantly impact their business. While it’s not their entire operation, there’s a considerable demand — and certainly a significant user base — for people to hold and purchase stablecoins because of the rewards. Personally, I’ve shifted my savings from a conventional bank to USDC because I’m earning 3.5 percent instead of a mere .001 percent. I believe this represents a significant use case for stablecoins, especially during this early stage where we’ve just seen the introduction of the first regulatory framework with the GENIUS Act. Although stablecoins haven’t achieved widespread adoption yet, they could soon, benefiting both B2B and B2C transactions.
Prior to the shooting, a major concern regarding the bill was the limited time available to pass it prior to election season. Do you think partisanship could hinder the bill’s progress?
It absolutely has to be bipartisan. The only way the bill gets through the Senate is with 60 votes, requiring at least six Democrats. A group of 12 Democrats has been diligently collaborating with a majority of Senate Republicans to push this forward. Over a hundred House Democrats have endorsed it, indicating it should be a bipartisan issue.
Democratic negotiators have secured substantial concessions in the Senate Banking bill, so I’m hopeful they can come to the table and say, “We want to support this and we’re going to vote yes.” Even amidst the highly partisan climate, this is one of the few issues that has demonstrated bipartisan potential, as seen with the passage of the GENIUS Act in the Senate and the Clarity and GENIUS acts in the House.
However, as politics overshadow policy, the closer we get to November and election day, the harder it becomes to prioritize getting this bill through. I’m aiming for a completion by the end of this quarter or early in the second quarter, but that timeline is growing increasingly challenging.
What does crypto look like as an issue heading into the midterm elections? Is it too tightly interconnected with MAGA and Trump, or will it lose relevance in voters’ decision-making?
It’s fascinating. When people talk to average voters, it’s not the primary issue on their minds, especially in the current climate. However, we conducted a survey late last year examining the political leanings of crypto holders. Surprisingly, they lean left, often supporting Democrats historically. Yet, crypto holders are fiercely dedicated to the industry. They’re single-issue voters who prefer to vote with their wallets. Although they typically align politically to the left, they’ve been casting their votes Republican, viewing the party as more supportive of crypto.
I’m optimistic that this will demonstrate to both parties that there’s a voter base ready for engagement. While it’s a small segment, considering the political contributions from the crypto sector last election and the passion among crypto voters, they definitely have the potential to influence election results.
The crypto vote will largely depend on whether market structure legislation is secured. If that legislation passes in the upcoming months, fewer contentious crypto issues will remain to be addressed. Thus, it won’t be a major ballot issue, but as things stand, crypto matters are increasingly integrated into broader economic discussions nationwide.
Returning to Congress: What should we watch for during the Agriculture markup?
The key is how [New Jersey Democratic Sen.] Cory Booker navigates this. [Minnesota Democratic Sen. Amy] Klobuchar, the ranking member, has tasked Booker with negotiating this bill alongside Chairman [Arkansas Republican Sen. John Boozman].
Klobuchar is quite swamped at the moment.
She is busy. Booker has been working diligently with the chairman. The Senate Ag Committee’s stated aim from the outset of this Congress has been creating a bipartisan product, which is crucial to them. This was reflected in the bipartisan discussion draft shared a few months back. However, this latest draft released last week was the first not to achieve bipartisan approval, leading Democrats to withdraw their support. They continue collaborating with Republicans to seek an agreement.
Currently, as we approach the markup, we need to see if there’s any change since the text was released last week. Has Cory Booker joined forces? Can a consensus be reached? From other Democrats on the committee, it’s been indicated that no progress will happen without Booker’s approval. If he supports it, a significant portion of Senate Democrats will likely vote in favor.
Should Booker oppose the bill, a partisan vote seems likely, resulting in it passing out of committee with only Republican backing.
Let’s consider a scenario where Democrats gain control of either the House or Senate. How significantly would the partisan makeup of those chambers impact whether this bill can advance again?
Given the people in leadership roles on the Democratic side for the relevant committees, it would have a huge impact. For instance, with [California Rep.] Maxine Waters returning as chairwoman of the House Financial Services Committee, she’s known to be skeptical of this technology. That would complicate the process significantly from the outset. Similarly, in Senate Banking, the situation could be even more dire for the crypto sector, given [Massachusetts Sen.] Elizabeth Warren’s potential ascension to chairwoman.
If either chamber shifts, passing the Clarity Act seems nearly impossible, as those two committee chairs would likely resist moving these issues forward. Their focus would probably land on enforcement. I’d speculate a flurry of subpoenas and inquiries into the Trump family’s cryptocurrency dealings. Little interest in advancing crypto legislation aimed at fostering adoption would follow.
On the other hand, who does the banking industry have on their side?
I’d say the majority of Democrats and several Republicans who are very aware of the banking industry’s concerns. These members represent substantial community, regional, or major banks. For example, [Republican Sen.] Thom Tillis, as a representative of a significant banking center in Charlotte, North Carolina, has voiced worry about the impact of rewards on the customer flight from banks. We’re also hearing similar concerns from [Alabama] Sen. Katie Britt regarding what her community banks are reporting about stablecoins potentially outcompeting them.
Nonetheless, my argument remains that this bill imposes no restrictions preventing banks from creating their own stablecoins and offering competitive rewards. This seems to be a matter of competition, aimed at maintaining a protective barrier. Nonetheless, some Republicans aligned with the banking sector are very adamant about ensuring the banks’ interests are safeguarded. Hopefully, we can soon strike a compromise, but for now, we continue to exist in that uncertainty.
Has Coinbase provided any signals about coming back to the negotiating table yet?
I haven’t heard anything direct from Coinbase. They likely have a clearer perspective on this. However, I’m hopeful that as the bill continues to be refined, they recognize that a positive bill is better than having none at all. I understand the prevailing sentiment of “no bill is better than a bad bill.” I agree, but it’s critical that we engage in discussions to enhance this legislation because we need a bill. We could find ourselves regretting it if Democrats take Congress and we miss these opportunities to advance, possibly even facing another Democratic administration. That scenario could lead to repeating the regulatory challenges of the Gary Gensler era of the Biden administration, leaving us wondering why we didn’t get that bill passed back in 2026.
Reddit post from u/Kinmuan via r/army.
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