The Clarity Bill Senate rewrite has sparked industry backlash, with Brian Armstrong and crypto leaders withdrawing support over strict provisions targeting tokenized securities, stablecoin yields, and DeFi regulations. Critics argue the amendments impose legacy banking rules that could kill blockchain innovation in the United States.
Key Insights
- The Senate rewrite of the Clarity Bill reportedly contains strict rules that many experts believe will kill innovation in the United States.
- Figures like Brian Armstrong have withdrawn their support because of legacy banking rules being imposed on blockchain tech.
- Some of the new provisions in the Clarity bill also target stablecoin rewards and DeFi negatively.
The US crypto industry spent years asking for a clear set of rules and suffered lawsuit after lawsuit. For a time between last year and now, many thought the Clarity Act would finally fix these problems. This is because the Clarity bill promised to draw a line between different government agencies and reduce the number of legal action cases over crypto.
However, the mood appears to have soured in mid-January, after a late-night rewrite by the Senate Banking Committee. What used to be a beacon of hope now looks like a major threat to the industry, and leaders like Brian Armstrong are jumping ship.
The Massive Problem With the CLARITY Bill Rewrite
The main source of tension comes from several “poison pills” that were added during the Senate session. Analysts say that these changes target the very things that make blockchain technology useful.
One major grievance is related to Section 505, and this part of the bill removes exemptions for tokenized securities.
The hard truth.
The CLARITY Act is the nationalization of crypto under the guise of consumer protection. I call it the final handover of decentralized finance to the same banks that nearly broke the world in 2008.
This bill was never about protecting investors, it’s about…
— Vandell | Black Swan Capitalist (@vandell33) January 15, 2026
Experts believe that this update will create a de facto ban on tokenized equities. This is a major problem, considering how experts also predict that the market for these real-world assets could reach $16 trillion by 2030.
The Clarity Bill’s update will force these assets to follow old, rigid paperwork requirements and make it nearly impossible to move traditional financial systems onto a modern blockchain.
The Sudden End of Stablecoin Yields
Another change that industry leaders are fighting against targets how people earn money from their digital dollars.
The Senate rewrite effectively bans anyone from earning passive yields for holding stablecoins. This move is reportedly a measure to protect traditional banks at the expense of individual holders, because banks worry that if stablecoins offer 5% yields simply for holding USDT or USDC, people might see these assets as a smarter way to save.
In other words, banning these rewards in the CLARITY Act means that legacy banks get to keep their revenue and stablecoins remain stagnant.
Groups like the Blockchain Association argue that this hurts competitiveness in the United States, as other countries are already moving ahead with more friendly rules.
Read more: Will the US Crypto Market Structure Bill Finally Bring Regulatory Clarity for Bitcoin and Ethereum?
New Surveillance Traps for Defi
It also doesn’t stop there. Privacy advocates are particularly worried about the new rules for DeFi.
The Clarity bill’s amendments would force websites that offer access to DeFi to register as brokers. These interfaces would have to monitor every transaction and would also need to block specific addresses and collect private user data.
This requirement destroys what it means for finance to be decentralized and permissionless.
It would force DEXs like Jupiter and PancakeSwap to act like centralized middlemen.
Analysts say that this gives the government unlimited access to the private finances of users and could set the country down on a dangerous slope.
A Civil War Among Leaders
Brian Armstrong of Coinbase has been very vocal about his opposition. He believes that a bad bill is more dangerous than the confusion the market suffered before. According to Reuters, Brian Armstrong confirmed that the company can no longer support the Clarity bill in its current form following the Senate Banking Committee’s amendments.
After reviewing the Senate Banking draft text over the last 48hrs, Coinbase unfortunately can’t support the bill as written.
There are too many issues, including:
– A defacto ban on tokenized equities
– DeFi prohibitions, giving the government unlimited access to your financial…— Brian Armstrong (@brian_armstrong) January 14, 2026
On the other side, some firms like a16z still support the bill despite the changes. They feel that any federal framework will allow big pension funds to finally invest in crypto. It is also worth noting that there is a small victory hidden in the text.
The bill protects software developers who do not hold user funds. This means that they will not be treated as money transmitters, which was in response to recent legal cases against developers who build or maintain privacy tools.
Disclaimer: This article is intended solely for informational purposes and should not be construed as financial advice. Investing in cryptocurrencies involves substantial risk, including the possible loss of your capital. Readers are encouraged to perform their own research and seek guidance from a licensed financial advisor before making any investment decisions. Voice of Crypto does not endorse or promote any specific cryptocurrency, investment product, or trading strategy mentioned in this article.
