A disagreement over US crypto regulation has spilled into public view, drawing the Cardano and XRP communities into an unexpected clash. The reason is the Digital Asset Market Clarity Act, a proposed bill intended to define how digital assets are regulated in the United States. 

The disagreement started after Charles Hoskinson openly criticized Brad Garlinghouse over his stance on the legislation, which led to pushback from prominent XRP community members. This comes just after reports have suggested growing frustration among lawmakers toward Coinbase over disagreements tied to the Clarity Act.

Hoskinson’s Criticism And Garlinghouse’s Position In Full Context

The tension came to the surface during a livestream in January 2026, where Hoskinson criticized Garlinghouse’s apparent support for advancing the Clarity Act despite its shortcomings. In the video, Hoskinson expressed skepticism about the bill’s direction and origins, remarking sarcastically, “And what we got is Elizabeth Warren wrote the bill, that’s leadership we can believe in.”

He went on to challenge the idea that passing an imperfect bill is preferable to continued uncertainty, pointing directly to the position of Ripple CEO Brad Garlinghouse. Hoskinson questioned whether handing regulatory power to the same institutions that previously sued, subpoenaed, or shut down crypto businesses could truly be considered progress.

Hoskinson’s remarks did not go unanswered. Vet, a notable XRP community member and XRP Ledger dUNL validator, reposted the video on X and criticized Hoskinson’s approach. Vet questioned why Hoskinson chose to publicly attack Garlinghouse instead of contributing constructively to the legislative process, writing, “How about focusing on helping shape the Clarity Bill instead of crashing out on Brad for no reason, Charles?”

Why The Clarity Act Matters To Both Communities

The Clarity Act is one of a few bills introduced during the current crypto-positive Trump administration that aims to bring structure to a regulatory environment that has been uncertain for years. The Clarity Act, in particular, was introduced to bring clarity around whether digital assets should be treated as securities or commodities and which agencies should oversee them. 

The bill represents a necessary step toward legal certainty and institutional participation. Supporters of XRP tend to see engagement with lawmakers as a practical route forward after years of legal battles. However, others like Charles Hoskinson are of a different notion. 

The Clarity Act is not without its issues. Sources close to the White House say the administration is considering pulling its support for the Clarity Act if Coinbase does not return to negotiations over stablecoin yield provisions. However, Coinbase CEO Brian Armstrong noted that Coinbase is actively working to find common ground with banks on yield-related issues.

A similar Act, called the Guiding and Establishing National Innovation for US Stablecoins Act, or the “GENIUS Act,” was signed into law in 2025 by President Donald Trump as part of efforts to create better regulatory clarity towards stablecoins in the United States. 

Interestingly, Ripple CEO Brad Garlinghouse was part of the crypto industry leaders that expressed support for the Genius Act after it was signed into law.

Coinbase CEO Brian Armstrong has denied existing tension between the exchange and the White House over the content of the crypto market structure bill, i.e., the Digital Asset Market Clarity Act. This development follows a series of contentious moments surrounding the highly anticipated crypto market structure bill, beginning with Armstrong raising concerns over its provisions, which the crypto exchange would rather protest than support.

Crypto Market Bill Still On, Bank Negotiations Ongoing — Coinbase CEO

In a surprising move on January 15, Armstrong announced a public support withdrawal for the Clarity Act. The key crypto figure argued that the current content of proposed legislation was introducing a regulatory structure that would produce a net negative effect on the crypto industry. In particular, Armstrong raised alarm on opposition to stablecoin yield sharing, among other issues, before emphasizing the preference of “no bill than a bad bill.”

Following this event, journalist Eleanor Terrett reported that the White House became furious over Armstrong and Coinbase’s public criticism, which they described as a “rug pull”. In particular, she claimed the Donald Trump-led administration has threatened to withdraw support for the Clarity Act if the crypto exchange fails to return to the negotiation table with satisfactory solutions to the stablecoin yield dilemma. 

However, Armstrong has come out to counter this narrative of a potential fallout between Coinbase and the US government. Rather, Armstrong stated the crypto exchange has only directed to negotiate a deal with banks on how stablecoin yield sharing can fit with the present financial system. 

Notably, the US banking industry has pushed against allowing stablecoin operators to share yield with users, which they project could potentially cause a deposit flight even at interest rates as low as 5%. Armstrong states Coinbase is now exploring a potential deal that could benefit all entities involved following what he described as a “super constructive” meeting with the White House, thereby countering the report of escalating tensions.

Terrett Fires Back At Coinbase Boss

In another X post, Terrett hit back at the Coinbase CEO, claiming her initial report remains accurate. The renowned journalist explains that Armstrong’s rebuttal on supports her earlier claim that the White House has now hinged their support of the Clarity Act to Coinbase’s ability to secure a deal with the banks on the implementation of stablecoin yield sharing.

For context, the Clarity Act is designed to clearly define how digital assets are regulated in the United States and which agencies oversee different parts of the crypto market. It is a crucial piece of legislation, the approval of which is expected to improve investor protection and encourage adoption.

As the anticipated markup of the CLARITY Act approaches, supporters of the digital asset market are raising alarms over the latest draft of the bill. They claim that the revisions pushed by banking lobbyists threaten to undermine the principles of the cryptocurrency industry.

Ban On Yield Payments In CLARITY Act 

In a recent post on social media platform X (formerly Twitter), market expert Nick Cash vocalized his strong opposition, stating that the current iteration of the CLARITY Act must be boycotted. 

He described it as a mechanism for banks to manipulate the future of cryptocurrencies, portraying their influence as a detrimental force for innovation in the sector.

The revised version of the CLARITY Act, which serves as a comprehensive crypto market structure bill, introduces significant restrictions on stablecoin issuers like Circle and Ripple. Notably, these firms will be prohibited from offering yield back to passive token holders. 

Title IV of the Digital Asset Market Consumer Protection Act (DAMCA) outlines how regulated banking institutions can interact with digital assets, mandating that stablecoin issuers—defined by the GENIUS Act—cannot make interest payments to holders.

Under the proposed changes, while stablecoin issuers would still be able to provide rewards tied to specific actions (such as account openings and cashback), the ban on yield payments poses a serious concern for the crypto industry, which has consistently viewed yield protection as a non-negotiable issue. 

Cash argues that the modifications may leave crypto-native issuers positioned at a competitive disadvantage against traditional banks. He warned that such restrictions could severely impact decentralized finance (DeFi) and the overall cryptocurrency landscape.

Expressing his frustration, Cash stated that those supporting the revised bill are essentially siding with banks and undermining the crypto movement. 

Strong Public Support For Stablecoin Rewards

Banking institutions have argued that allowing these interest payments could lead to a significant outflow of deposits from insured banks, threatening overall financial stability. 

In contrast, crypto advocates counter that blocking crypto exchanges from paying interest on stablecoins is anti-competitive and detrimental to innovation. Summer Mersinger, CEO of the Blockchain Association, articulated her stance, asserting:

What is threatening progress is not a lack of policymaker engagement, but the relentless pressure campaign by the Big Banks to rewrite this bill to protect their own incumbency. 

She highlighted that the demand to eliminate stablecoin rewards aims to restrict consumer choice and stifle innovative financial products before they have the chance to compete.

Amid this ongoing CLARITY Act debate, Stuart Alderoty, Chief Legal Officer at Ripple, weighed in, emphasizing that American consumers value their freedom to choose. 

He referenced new data from The National Cryptocurrency Association, which indicates a strong public preference—nearly 4-to-1—in favor of allowing stablecoin rewards, along with little appetite for government intervention to curb them.

Ultimately, the future of the CLARITY Act remains uncertain as stakeholders continue to voice their concerns about the implications of increased banking oversight on the cryptocurrency market.

Featured image from DALL-E, chart from TradingView.com 

As the Senate Banking Committee prepares for the markup of the anticipated crypto market structure bill, known as the CLARITY Act, an updated draft has been released following extensive negotiations. 

This new version aims to provide a clearer regulatory framework for digital assets, defining oversight responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). 

Major Takeaways From The Crypto Bill’s Draft

The latest draft released on Monday night, includes critical provisions recognized as gains for the industry. Notably, Paul Barron, a market expert, pointed out that the bill now defines “Custodial and Ancillary Staking Services” as a recognized activity, emphasizing that such services are considered “administrative or ministerial.” 

As a result, registered intermediaries will be allowed to facilitate staking for customers while ensuring that individual assets are segregated from the platform’s own funds. However, assets can be pooled with others for efficiency, such as through an omnibus account.

The bill also reinforces the existing status quo concerning anti-money laundering (AML) and know-your-customer (KYC) regulations. Exchanges and brokers will still be required to comply with the Bank Secrecy Act, perform KYC checks, and monitor for any illicit financial activities.

Key wins for consumers include an explicit right to self-custody. Section 105(c) of the bill grants US individuals the right to maintain a hardware or software wallet for their own lawful custody of digital assets. 

Additionally, this section protects the ability to engage in direct peer-to-peer (P2P) transactions using self-custody wallets without the need for financial intermediaries.

Furthermore, the legislation aims to safeguard wallet developers. Section 109 ensures that non-controlling blockchain developers or providers of hardware or software facilitating customer custody will not be classified as money transmitters. 

This provision of the crypto market structure bill protects developers of wallets, such as those from Ledger, Tangem, and MetaMask, from being regulated as financial institutions solely based on their coding efforts.

Critical Insights On DeFi Provisions

Another significant aspect of the bill is its provisions regarding decentralized finance. The Act establishes exclusions that help protect DeFi protocols and developers from being classified as centralized exchanges (CEXs) or brokers. 

Specifically, Section 309 states that individuals will not be subject to the Securities Exchange Act solely for activities such as developing DeFi trading protocols, publishing user interfaces for blockchain systems, or operating nodes.

For consumers using DeFi products and protocols, the Act creates a legal “safe harbor,” allowing continued use of decentralized finance without the imposition of forced intermediaries. However, it is important to note that this does not provide immunity for any illicit financial activities.

Pro-crypto Senator Cynthia Lummis, who led the Republican Party’s negotiations to achieve the best possible results for digital asset growth in the country, sent the following message to her Democratic colleagues on social media: 

After months of hard work, we have bipartisan text ready for Thursday’s markup. I urge my Democrat colleagues: don’t retreat from our progress. The Digital Asset Market Clarity Act will provide the clarity needed to keep innovation in the U.S. & protect consumers. Let’s do this!

As for the crypto bill’s likelihood of passing, Barron suggests a medium-high probability, estimating a 60-70% chance it could become law in early 2026. 

However, the expert asserted that the outcome may hinge on either removing or softening the “Anti-CBDC” provisions or making concessions to banks regarding stablecoin reserves to meet the Senate threshold.

Featured image from DALL-E, chart from TradingView.com