A Calculated Offensive, Not a Lobbying Exercise
Coinbase Chief Legal Officer Paul Grewal and Chief Policy Officer Faryar Shirzad have jointly endorsed the Digital Asset Market Clarity Act — commonly known as CLARITY — mounting a coordinated public defence of privately issued payment stablecoins while calling on Congress to establish a statutory framework that would curtail the SEC’s authority to pursue enforcement-driven crypto regulation.
This is not routine corporate lobbying. It is a deliberate attempt to permanently shift the locus of regulatory authority from federal courts — where outcomes remain reversible — to statute, where they do not. For anyone tracking our ongoing coverage of how Washington is reshaping digital asset markets, the significance of two C-suite executives coordinating a public legal argument in real time should not be underestimated.
The timing is precise. With the Senate Banking Committee actively reviewing the bill and November midterm elections imposing a hard legislative deadline, the industry’s window to shape final language is closing.
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SubscribeWhy Stablecoins Are Not Banks — And Why It Matters
At the heart of Coinbase’s argument is a structural distinction that regulators have, its executives argue, persistently refused to apply. Shirzad put it directly: “Banks are regulated the way they are because of what banks do: lend, transform maturities, run roughly 10:1 leverage, and create credit. GENIUS issuers cannot do any of those things. By statute, they hold cash and short-dated US Treasuries 1:1 against on-demand claims. No loans.” BeInCrypto
Under the GENIUS framework — CLARITY’s legislative companion, signed into law in July 2025 — payment stablecoin issuers are prohibited from making loans, engaging in maturity transformation, running leverage, or holding fractional reserves. They must instead maintain one-to-one backing with cash and short-dated US Treasuries, submit to monthly reserve attestations, and provide real-time on-chain visibility into reserve composition. Coinspeaker
Readers who followed our analysis of the GENIUS Act’s passage and what it means for European digital finance will recognise this architecture. The argument now is that subjecting instruments built on these constraints to bank-equivalent SEC oversight is not merely disproportionate — it is analytically incoherent. The full text of the Digital Asset Market Clarity Act is available via Congress.gov for those who want to examine the statutory language directly.
The Senate Sticking Point: Stablecoin Yield
House passage was emphatic. The CLARITY Act cleared the House 294–134 in July 2025. Senate progress has been far more turbulent, with the central dispute centring on whether platforms can offer rewards to stablecoin holders without being reclassified as deposit-taking institutions — a distinction that cuts directly to Coinbase’s revenue model.
A compromise brokered by Senators Thom Tillis and Angela Alsobrooks would ban yield economically equivalent to bank deposits while permitting rewards tied to what the legislation terms “bona fide activities.” Coinbase and Circle immediately backed the deal and urged the Senate Banking Committee to advance the bill.
Prediction markets responded. The probability of CLARITY passing in 2026 jumped from 46% to 64% on Polymarket following the compromise announcement. Grewal subsequently expressed confidence that the bill could clear the Senate by end of summer 2026, with the White House also pushing Congress for faster action.
The Commercial Stakes
Coinbase’s legislative activism is inseparable from its financials. As we reported in our deep-dive on Coinbase’s European expansion strategy, the exchange’s exposure to stablecoin infrastructure has become foundational to its revenue base. Stablecoin-related revenue accounted for close to 20% of Coinbase’s total revenue in Q3 2025. The global stablecoin market capitalisation stood at $305bn as of Q1 2026, with projections pointing to a tenfold expansion toward $3 trillion by 2030.
At that scale, who writes the rulebook is a balance sheet question as much as a political one. Coinbase’s Q1 2026 earnings deck, filed with the SEC, makes the commercial logic explicit.
The European Dimension
Washington’s choices on stablecoin regulation will not stay within US borders. Dollar-denominated stablecoins operating under a transparent, statutory US framework could accelerate displacement of euro-denominated alternatives — a prospect that should concentrate minds in Brussels as much as on Capitol Hill. Our analysis of MiCA’s first two years and the competitive pressure it now faces sets out the risk in detail.
The European Commission has already commenced a consultation on the functioning of MiCA, assessing whether rules enacted in 2023 require updating as digital asset markets and global regulation evolve. If CLARITY passes and establishes a clear, non-SEC pathway for stablecoin issuance, European regulators will face intensifying pressure to respond. CoinDesk
What Comes Next
Every senator and congressional observer covering the legislation cites the same hard deadline: the November 2026 midterm elections, which historically go against the sitting president’s party. If the Senate cannot deliver before then, the legislative scaffolding risks being reset entirely. FinTech News
For Coinbase, that outcome is unacceptable — which is precisely why its most senior legal and policy voices are no longer content to let federal courts set the terms of engagement.
