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CLARITY Act Stirs Debate as Coinbase Pushes Back on Stablecoin Yield Restrictions

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Brian Armstrong's Bold Prediction: AI Agents Will Soon Dominate Global Financial

TLDR:

  • Coinbase risks losing $1.35B in annual revenue if the CLARITY Act’s passive yield ban passes as written.
  • White House Crypto Adviser Patrick Witt warned Coinbase to stop blocking the bill or face losing the deal entirely.
  • JPMorgan’s Dimon publicly clashed with Coinbase’s Armstrong at Davos 2026 over the CLARITY Act’s stablecoin terms.
  • Coinbase charges a 35% commission on staking rewards, making yield protections central to its entire business model.

The CLARITY Act is at the center of a heated debate between Coinbase and U.S. lawmakers. As the Senate Banking Committee prepares to release the full draft of the Digital Asset Market Clarity Act of 2025, Coinbase has raised “significant concerns” about stablecoin yield provisions.

Critics argue the exchange is stalling the largest crypto legislation in U.S. history. Supporters say Coinbase is protecting both its business and the broader crypto ecosystem.

Coinbase’s Revenue at Risk as Yield Ban Looms

The latest Senate draft includes a provision that bans “passive yield” on stablecoin balances. This means platforms cannot pay users simply for holding stablecoins. Only narrow, activity-based rewards may survive under the current language.

The financial stakes for Coinbase are substantial. The exchange and its partner Circle earned roughly $2.75 billion gross in 2025 from interest on U.S. Treasuries backing USDC. Circle retains the gross earnings but forwards over 60% to Coinbase.

Coinbase pockets all on-platform rewards and around 50% from other sources. This adds up to an estimated $1.35 billion, representing nearly 19% of its total 2025 revenue. A ban on passive yield could eliminate that income almost entirely.

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Coinbase Chief Legal Officer Paul Grewal made the company’s position clear. “My memory is a little better than to trust future rogue regulators to faithfully apply the law,” Grewal said. His concern centers on vague bill language that future regulators could later use against the industry.

The exchange is now drafting a counterproposal. It aims to preserve sustainable rewards programs while still supporting most of the CLARITY Act’s other provisions, including DeFi rules and SEC/CFTC jurisdiction clarity.

White House Issues Warning as Political Window Narrows

White House Crypto Adviser Patrick Witt issued a direct warning to Coinbase over its position on the bill. Witt did not mince words, stating plainly: “BLOCK IT… AND SEE WHAT HAPPENS.”

He used a football analogy, comparing Coinbase to a quarterback holding the ball too long while the pocket collapses.

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His message was straightforward: pass the best deal available now or risk losing everything. The administration has made clear it wants crypto legislation finalized during this favorable window. Delay, in their view, could result in a far less friendly regulatory environment later.

The tension between Coinbase and Washington became public earlier at Davos in January 2026. JPMorgan CEO Jamie Dimon confronted Coinbase CEO Brian Armstrong at a private coffee meeting.

Dimon reportedly told Armstrong directly, “You are full of s—,” accusing the exchange of lying about banks quietly gutting the CLARITY Act.

The irony in that confrontation is hard to miss. In July 2025, JPMorgan and Coinbase announced a major partnership.

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Chase customers can now link bank accounts to Coinbase wallets, use credit cards for trades, and transfer reward points into crypto.

The public conflict between both firms, therefore, raises broader questions about how much of the drama is strategic.

Private deals and public disputes often serve different purposes in high-stakes legislative battles. The next draft of the CLARITY Act, expected next week, will reveal how much ground either side has gained.

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Crypto World

Oil Rose 3% to Open the Week: Here’s What Moved the Market on Monday

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Oil prices jumped more than 3% on Monday, pushing Brent crude above $116 a barrel. West Texas Intermediate (WTI), the US benchmark, climbed to roughly $102 per barrel.

The latest rise comes as the US-Israel war on Iran entered its fifth week with no signs of abating.

Oil Extends Its War-Fueled Rally 

Several escalatory developments over the weekend fueled the surge. President Donald Trump told the Financial Times he could possibly seize Kharg Island, the terminal that handles roughly 90% of Iran’s crude exports.

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The US president struck a mixed tone on diplomacy with Iran, saying he was “pretty sure” of making a deal with Iran but conceding that talks could still collapse.

Meanwhile, Iran’s parliament speaker warned that Tehran would “set them on fire” when American forces arrived and promised consequences for US-allied nations in the region. 

The oil price surge is far from over, according to market analysts, who warn that the prolonged closure of the Strait of Hormuz could drive crude even higher.

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“A scenario in which the Strait remains closed for an additional month would be consistent with oil prices rising towards $150/bbl and constraints on industrial consumers of energy supply,” Bruce Kasman, global head of economics at JPMorgan, said.

According to Bloomberg, US officials and Wall Street analysts have also begun discussing the possibility of crude reaching $200 per barrel.

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Asian Stocks Tumble, Crypto Feels the Pressure

The energy shock rippled across Asia. Google Finance data showed that Japan’s Nikkei 225 fell over 4.5%, while South Korea’s KOSPI dropped more than 4.3% as import-dependent economies repriced risk.

The volatility has spread to crypto markets, with asset prices dipping early in the morning before rebounding. 

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“The market briefly crashed just now — ETH dropped below $1,940 and BTC fell below $65,000,” Lookonchain reported.

Oil above $100 per barrel continues to pressure risk assets by fueling inflation expectations and delaying anticipated Federal Reserve rate cuts.

The post Oil Rose 3% to Open the Week: Here’s What Moved the Market on Monday appeared first on BeInCrypto.

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Lido DAO Mulls $20M LDO Buyback to Boost Token Price

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Lido DAO Mulls $20M LDO Buyback to Boost Token Price

Lido’s decentralized autonomous organization is considering a one-off $20 million buyback of its governance token to address so-called price dislocation, which is at “historically depressed levels” relative to Ether, according to the DAO. 

The proposal, submitted Friday, seeks permission to swap 10,000 Lido Staked Ether (stETH) tokens, currently worth $20 million from the DAO’s treasury for Lido DAO (LDO), arguing that LDO is undervalued.

“This is not a routine fluctuation. It represents one of the most significant dislocations between LDO’s market price and its underlying protocol fundamentals in the token’s history.”

A token buyback of this size could boost the price of the token, which has fallen roughly 96% from its all-time high. In November, a Lido DAO member pitched an automated buyback mechanism for LDO to improve the token’s price. However, that proposal hasn’t been implemented.

LDO’s change in price relative to ETH since 2024. Source: Lido DAO

Lido DAO pointed out that LDO is trading at a steep discount to Ether (ETH) at a ratio of 0.00016, roughly 63% below its two-year median.

This is despite the protocol holding the top spot of the Ethereum liquid staking market, with a 23.2% share of staked Ether, according to Dune Analytics data. The protocol’s dominance has even been flagged as a centralization risk to the network in previous years.

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Share of Ethereum network validators. Source: Dune Analytics

Related: Ethereum builders propose ‘economic zone’ to tackle L2 fragmentation 

LDO is currently trading at $0.30, down 95.9% from its $7.30 high set in August 2021, according to CoinGecko data. LDO’s $255 million market cap makes it the 141st largest token by value at the time of writing.

“That dislocation is not justified by a proportional deterioration in protocol performance,” Lido DAO said. 

Lido DAO proposes buying stETH in batches

Lido DAO proposed buying up to 10,000 stETH in smaller batches of 1,000 to buy LDO. 

Lido DAO said it would use limit orders or adopt a dollar-cost averaging strategy to avoid market volatility. 

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