Democrats Sink Teeth Into CLARITY: Customer Protections Added, Ethics Remain the Bone of Contention 🦷

Coinbase Vice Chair Ryan VanGrack said Democratic lawmakers have added new consumer protection provisions to the Digital Asset Market Clarity (CLARITY) Act during closed-door negotiations in the Senate, giving the legislation what he called "more teeth." In a Monday CNBC interview, VanGrack framed the additions as a customer-first effort, stating, "[A]t the end of the day, this is about customer protections. The status quo lacks this infrastructure, lacks these protections, and the Democrats used this opportunity, wisely, to make sure that customers were first and foremost in [this bill]." The legislation is expected to be the most comprehensive federal framework for the crypto industry.

VanGrack did not address progress on ethics provisions that many Senate Democrats have said are necessary for their votes. Coinbase Chief Legal Officer Paul Grewal and other executives have publicly backed passage of the bill, reversing the company's earlier opposition. In January, Coinbase CEO Brian Armstrong had said the exchange could not support an earlier version of the bill, contributing to a delay in markup by the Senate Banking Committee. The legislation has the support of US President Donald Trump, who last week urged senators to pass the CLARITY Act "in honor of" Senator Lindsey Graham following the South Carolina lawmaker's death. Trump described Graham as "a big supporter" of the bill in a social media post.

Republican lawmakers met with Trump on Thursday to discuss the legislation amid Democratic concerns about the president's financial ties to the crypto sector. In June, Trump disclosed $1.4 billion in earnings tied to his memecoin Official Trump (TRUMP), his family crypto venture World Liberty Financial and other digital asset investments. Senate Democrats held a closed-door meeting on Wednesday to evaluate their positions on the bill. As of Monday, the final text had not been released and no floor vote had been scheduled.

Under the Biden administration, the US Securities and Exchange Commission (SEC) had sued Coinbase for allegedly operating as an unregistered securities exchange, broker and clearing agency. The agency dropped the case shortly after Trump took office, with the SEC led by acting chair Mark Uyeda, one of the president's appointees. The crypto industry has spent $189 million on lobbying efforts through the current election cycle in support of comprehensive market structure legislation.