Coinbase CLO Pushes Stablecoin Bill to End SEC Overreach
In Clarity Act news, Coinbase Chief Legal Officer Paul Grewal and Chief Policy Officer Faryar Shirzad have jointly endorsed the Digital Asset Market Clarity Act, commonly referred to as the Clarity for Payment Stablecoins Act, or CLARITY, mounting a coordinated public defense 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 simply a lobbying exercise from an exchange with commercial interests in stablecoin infrastructure. It is a deliberate attempt to use legislative architecture to permanently redefine the regulatory boundary between the SEC and the emerging stablecoin market, shifting the locus of authority from federal courts, where case-by-case outcomes remain reversible, to statute, where they do not.
The push arrives against a specific litigation backdrop. The SEC has maintained, through successive enforcement actions, that a broad class of digital assets qualifies as securities under the Howey Test, a position Coinbase has contested directly in its own ongoing legal proceedings with the agency.
Money that’s “private” isn’t any more inherently risky than healthcare or security or transportation that’s private. It’s how you manage that risk, as well as access and oversight that matters. CLARITY promotes all this. https://t.co/1aYRA0FTOp
— Paul Grewal (@iampaulgrewal) May 25, 2026
Grewal, who has made the regulation-by-enforcement critique a consistent theme in his public commentary, is now making the case that favorable judicial rulings alone are insufficient, that only a congressional mandate can provide the durable classification certainty that institutional participants require before deploying capital at scale into dollar-denominated digital assets like USDC.
We suspect the timing of this coordinated advocacy push is not incidental to Coinbase’s litigation posture. A statutory framework that explicitly removes payment stablecoins from the SEC’s jurisdictional reach would not merely benefit Coinbase’s policy preferences – it would materially weaken the evidentiary foundation of the SEC’s broader enforcement theory by establishing, as a matter of federal law, that stablecoin instruments are not investment contracts. That outcome is far more valuable to the exchange than winning any single case.
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Clarity Act News: Clarity for Payment Stablecoins Act, What the Bill Establishes and Why the SEC Enforcement Gap Matters
The Digital Asset Market Clarity Act, in its current Senate-stage form, represents the most comprehensive federal attempt yet to define a supervised pathway for payment stablecoin issuers operating within the United States.
The bill works in tandem with the Guiding and Establishing National Innovation for U.S. Stablecoins Act, known as the GENIUS Act, which was signed into law in July 2025 and established the reserve and disclosure baseline that CLARITY now seeks to extend across the broader digital asset market structure.
Together, the two instruments form the legislative scaffolding that Coinbase executives argue makes bank-equivalent regulation both unnecessary and analytically incoherent when applied to stablecoin issuers.
A piece from @greg_ip in @WSJ today asks whether stablecoins are a risk to the economy because they are "private money." It's a fair question, but the framing skips over how the US monetary system has actually worked for 160 years.
"Private money" isn't the exception in our… pic.twitter.com/gXeqLwiLmP— Faryar Shirzad 🛡️ (@faryarshirzad) May 25, 2026
The mechanism functions as follows: under the GENIUS framework, payment stablecoin issuers are prohibited by statute from making loans, engaging in maturity transformation, running leverage, or holding fractional reserves. Instead, they are required to maintain one-to-one backing of all outstanding tokens with cash and short-dated U.S. Treasuries, submit to monthly reserve attestations, and provide real-time on-chain visibility into reserve composition.
Shirzad articulated the structural distinction 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.”
CLARITY would extend this architecture into market structure, addressing which regulator – the SEC or the CFTC, holds primary jurisdiction over which categories of digital assets, and establishing a registration and compliance regime for exchanges and intermediaries. The Senate Banking Committee has been advancing the bill toward a full floor vote, though the Senate must still reconcile its version with the House-passed text.
Prediction market participants have been pricing passage odds at approximately 50%, according to recent Polymarket data, reflecting genuine uncertainty about whether the Senate can clear its procedural calendar before the November deadline closes the remaining legislative windows ahead of midterms.
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