Congress is on the cusp of creating a regulatory framework for cryptocurrency assets, a policy goal pursued by Coinbase Global and other crypto companies for much of the past five years. Final passage isn't guaranteed, but progress to date sends a strong signal that the federal government no longer will stand in the way of crypto's integration with other financial markets and the economy.
The Senate is nearing a vote on the so-called Clarity Act, a broad bill setting guardrails for digital assets. Its most important provisions would remove most crypto trading from the purview of securities regulators and essentially bless the systems and structures that American crypto companies use today.
The mere chance of the bill passing has been a boon to crypto investments. Shares of Coinbase have risen 9.7% this month to a recent $160.33, while Bitcoin has gained 11%, to about $64,900. On prediction market Kalshi, traders give such a bill a 64% chance of becoming law by next April, nearly double the odds earlier in the month.
The bill "brings legitimacy to the space," said Summer Mersinger, CEO of the Blockchain Association, a trade group whose members include Coinbase and dozens of other firms. The bill's passage would make banks and other traditional financial firms more comfortable engaging with crypto and prevent the risk that a future White House cracks down on the industry, Mersinger said.
The Clarity Act needs at least 60 votes to clear procedural hurdles in the Senate, which means it will need support from seven Democrats in addition to all Republicans. The sticking point is President Donald Trump's finances. Trump recently disclosed that he made more than $1 billion from crypto-tied investments last year. Democrats are demanding that the crypto bill include some sort of ban on Trump's and other government officials' engagement in crypto ventures.
Republican senators released a new version this past week that included a partial ban, but the provision would be enforced by Trump's Justice Department and would disappear as soon as he left office. Democrats have said it is a nonstarter but that they will continue to negotiate.
"The status quo is not serving anyone in the U.S. right now," said Coinbase CEO Brian Armstrong in a video he posted to social media on Wednesday, arguing that the bill cements consumer protections and the U.S.'s lead in crypto innovation.
The problem for lawmakers and Coinbase is that Congress is nearly out of time to reach a deal. The Senate begins a lengthy recess on Aug. 7, and the rest of the year will be dominated by the November midterm elections and other legislative priorities. If the Senate fails to pass the bill by the recess, that could shut the door on crypto market-structure legislation for years.
That would be detrimental to trading venues such as Coinbase that were hit in the past with enforcement actions by the Securities and Exchange Commission alleging they violated the law. Coinbase has denied that. The SEC under President Joe Biden treated most tokens as unregistered securities offerings. The Trump administration dropped most of those related enforcement actions, but the fear is that a future White House could bring them back.
A renewed crackdown would be damaging. Although many government officials have said that Bitcoin and Ethereum likely aren't subject to current securities laws, there is less consensus on other tokens. Those other "altcoins" accounted for roughly half of Coinbase's trading revenue in the first quarter. The risk of civil penalties could also dissuade traditional finance firms from expanding their own crypto segments, dampening asset prices.
But there are also reasons for optimism.
It is significant that the final objections in the Clarity Act negotiations concern presidential conflicts of interest rather than the core issues of crypto regulation, said Chris Niebuhr, an analyst at Washington-based Beacon Policy Advisors. That is a positive signal for the industry and suggests a Democrat-led White House wouldn't bring back a Biden-era crackdown.
"There's been an acceptance that crypto exists as a legitimate product," Niebuhr said. "I don't think at this point Democrats can or will return to that."
Crypto's massive campaign war chest will also dissuade many lawmakers from fighting the industry and will keep the door open for a future legislative attempt if this one fails. At the end of May, the industry-backed Fairshake political action committee had nearly $126 million on hand, making it the second-largest super PAC and the largest super PAC not affiliated with a political party.
In lieu of legislation, regulators under Trump would move forward with crypto-friendly rules on their own. The SEC has said it plans to issue market-structure rules that would make clear "rules of the road for the issuance, custody, and trading of crypto assets" and a safe harbor to allow firms to experiment with tokenized assets.
Traditional finance firms are also proceeding with crypto-related projects. The Depository Trust & Clearing Corp., a trading processor, tested a tokenization program in July with dozens of firms including crypto companies and banks, and is eyeing an official launch in October.
Other firms' increasing interest in blockchain and crypto isn't without downsides for Coinbase, said Ed Engel, an analyst at Compass Point Research & Trading, who has a "Sell" rating on the stock. While the crypto industry may grow, Coinbase's market share and fees could fall with the increased competition.
"For the industry as a whole, if the Clarity Act doesn't pass, there are enough important things that could happen in the second half of the year to get people excited about the space," Engel said. "For at least the next two to three years, blockchain has the opportunity to prove it can actually create some solutions."
Write to Joe Light at joe.light@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 24, 2026 03:00 ET (07:00 GMT)
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