Coin Center Warns CLARITY Act Failure Could Enable Future US Crypto Crackdown

Coin Center executive director Peter Van Valkenburgh warned on March 28, 2026 that failing to pass the CLARITY Act would leave the cryptocurrency industry vulnerable to future enforcement actions from subsequent administrations, as the market structure bill remains stalled in the Senate over disagreements on provisions including stablecoin yields.

Van Valkenburgh argued that relying on the current administration’s favorable regulatory posture without securing statutory protections would risk subjecting developers and infrastructure providers to prosecutorial discretion and shifting political winds.

Van Valkenburgh Urges Statutory Protections as CLARITY Act Stalls in Senate

The CLARITY Act, a proposed U.S. law consolidating crypto market structure regulations, has stalled in the Senate as banks, crypto firms, and lawmakers continue to debate key provisions including whether to allow third parties to offer stablecoin yields. The bill also encompasses frameworks for registering crypto intermediaries, regulating digital assets, and classifying tokens.

Van Valkenburgh stated on X that rejecting developer protections in legislation such as the CLARITY Act and the Blockchain Regulatory Certainty Act in favor of short-term business interests would lead to a grim future for the industry. He emphasized that the purpose of passing CLARITY is not to trust the current administration but to bind the next one, creating enduring legal protections rather than depending on continued goodwill.

Without legislative clarification, Van Valkenburgh predicted that a future administration’s Department of Justice could ramp up prosecutions of privacy-tool developers as unlicensed money transmitters, and that existing regulatory interpretive guidance could be revoked. He also warned that the Securities and Exchange Commission could resurrect efforts to define the Exchange Act broadly enough to treat software developers and infrastructure providers as brokers, dealers, or exchanges whenever their software touches tokenized securities.

Crypto Industry Divisions Threaten Legislative Progress amid Bipartisan Support

Ripple CEO Brad Garlinghouse described negotiations on the bill on March 28 as “not been pretty,” though he expressed expectation that lawmakers, banks, and crypto firms would eventually reach consensus. Galaxy Digital researchers noted that time is running out for CLARITY, with the bill’s prospects of passage in 2026 diminishing if it fails to reach the Senate floor by May.

Van Valkenburgh characterized the crypto industry as containing factions he described as nihilists who reject developer protections in favor of short-term business interests. He warned that rival authoritarian factions are eager to treat crypto as a political enemy or as little more than big-tech-fueled speculation, and that divisions within the industry could prove the bill’s undoing.

Pro-crypto Senator Cynthia Lummis continues to back the bill despite industry criticism, dismissing allegations that CLARITY would fail to protect software developers against designation as money transmitters. Lummis stated that bipartisan work over recent weeks has aimed to make the bill the strongest protection for decentralized finance and developers ever enacted.

Regulatory Shift under Current Administration Contrasts with Future Enforcement Risks

Since former SEC Chair Gary Gensler resigned on January 20, 2025, the SEC has dismissed several long-running enforcement actions against crypto firms and issued friendlier guidance on its approach to crypto regulation. Van Valkenburgh noted that this regulatory shift has created a favorable environment that some industry participants may mistake for permanent stability.

Van Valkenburgh argued that depending on the continued goodwill of the ruling administration constitutes a major gamble. He warned that if the industry loses the current legislative moment because participants prioritize revenue and latitude under short-term favorable discretion, the sector would fail to secure the transparency, neutrality, and openness that crypto represents. He further stated that without CLARITY’s statutory protections, the industry would have helped tie the noose itself, handing enforcement tools to future officials.

Coin Center indicated readiness to fight future enforcement actions through repeated court challenges if CLARITY fails, though Van Valkenburgh acknowledged the possibility of losing such battles. He described a coalition of technology- and freedom-loving lawmakers currently in Congress as a ramshackle but potentially effective force for passing protective legislation.

FAQ

What is the CLARITY Act and why has it stalled in the Senate?

The CLARITY Act is proposed U.S. legislation that would establish frameworks for registering crypto intermediaries, regulating digital assets, and classifying tokens. The bill has stalled due to disagreements among banks, crypto firms, and lawmakers over key provisions including whether to allow third parties to offer stablecoin yields.

What did Coin Center warn could happen if the CLARITY Act fails?

Coin Center executive director Peter Van Valkenburgh warned that without CLARITY, a future administration could reverse the SEC’s current friendly posture, prosecute privacy-tool developers as unlicensed money transmitters, and redefine securities laws to treat software developers as brokers or exchanges when their software interacts with tokenized securities.

Which lawmakers are supporting the CLARITY Act?

Pro-crypto Senator Cynthia Lummis has been backing the bill, stating that bipartisan work has aimed to make the legislation the strongest protection for decentralized finance and developers ever enacted. A coalition of technology- and freedom-loving lawmakers in Congress is supporting the bill’s passage.