A high-stakes confrontation between the White House and the cryptocurrency industry has moved into the public eye following the delay of the Senate's landmark CLARITY Act. On Tuesday, January 20, 2026, Patrick Witt, the executive director of the President’s Council of Advisors for Digital Assets, issued a stern warning to industry leaders who have withdrawn their support for the current legislative draft. Witt's comments were a direct response to Coinbase CEO Brian Armstrong, who famously stated he would "rather have no bill than a bad bill." Witt argued that the window to pass a favorable, pro-innovation crypto market structure bill is narrowing, and that failing to compromise now under a sympathetic administration could lead to "punitive legislation" in the future. With Senate Banking Committee and Senate Agriculture Committee markups postponed to late January, the tension highlights a critical divide: whether the industry should accept a flawed framework today or risk more restrictive oversight tomorrow.

• Discover the "unfolding rug pull" accusations between the White House and major exchanges over stablecoin yield agreements.
• Learn why federal advisors believe a future "Democrat version" of the CLARITY Act would be significantly more restrictive for DeFi and tokenization.
• Explore the specific concessions regarding stablecoin rewards and on-chain transparency that are currently stalling the bipartisan vote.

The current legislative friction centers on the CLARITY Act, formally known as the Digital Asset Market Clarity Act. The bill aims to replace the "regulation by enforcement" era with a statutory framework that clearly delineates jurisdiction between the SEC and the CFTC. However, the momentum was blunted when Coinbase and other lobbyists dropped their support, citing concerns over de facto bans on tokenized equities and restrictive rules for decentralized finance (DeFi).

Patrick Witt dismissed the "no bill" stance as a dangerous gamble. He emphasized that the current political landscape—featuring a pro-crypto President, control of Congress, and sympathetic leadership at the SEC and CFTC—is a unique opportunity that may not last. Witt warned that the industry’s refusal to bend on specific provisions, such as stablecoin rewards, could lead to a legislative vacuum that a future, less friendly administration would fill with "punitive" measures similar to the Dodd-Frank Act.

One of the primary "red lines" for the industry involves the treatment of stablecoins. Banks and some lawmakers have pushed for language that prevents non-bank intermediaries from offering interest-bearing rewards on stablecoins, fearing a massive drain on traditional deposits. Coinbase has argued that such restrictions would leave the U.S. industry "materially worse" than the status quo.

This debate is not happening in a vacuum. Industry observers note that the passage of the GENIUS Act for stablecoins provided a foundation, but the CLARITY Act is intended to build the actual market structure. Reports suggest the White House is "furious" with the industry's recent pushback, viewing it as a "rug pull" against months of good-faith negotiations. The White House's future support for the crypto market structure bill reportedly hinges on whether the industry can reach a yield agreement that satisfies the traditional banking sector.

The clock is ticking for the Senate Banking Committee. With the 2026 midterms approaching, Republicans are eager to secure a "generational shift" in financial policy before the campaign cycle fully consumes the legislative calendar. Patrick Witt’s urgency reflects a concern that if the bill is not passed now, the narrative could be seized by critics who equate the industry's push for "decentralization" with a desire to evade anti-money laundering (AML) and "know your customer" (KYC) standards.

The delay in the Senate Agriculture Committee markup to January 27 provides a brief window for stakeholders to return to the table. As noted in recent reports on Bank of America's move to allow Bitcoin ETF recommendations, institutional adoption is accelerating even without federal clarity. However, without the CLARITY Act, this growth remains vulnerable to sudden shifts in agency policy. For the White House, the choice is clear: the industry must accept the "excellent regulators" currently in place and cut a deal before the political winds change.

FAQs

What is the CLARITY Act and why is it currently stalled?
The CLARITY Act (Digital Asset Market Clarity Act) is a crypto market structure bill that seeks to define the roles of the SEC and CFTC. It is currently stalled because the Senate Banking Committee and industry leaders like Coinbase disagree on rules for stablecoin yields, DeFi privacy, and tokenized equities.

Why does the White House advisor argue that "perfect is the enemy of the good"?
Patrick Witt believes that the industry is risking a rare opportunity to pass favorable laws under a pro-crypto administration. He argues that by refusing to compromise on certain details, the industry may end up with much harsher, "punitive" regulations under a future Democratic-led Congress.

What are the main concerns raised by Coinbase and Brian Armstrong?
Coinbase withdrew support for the bill "as written," citing a de facto ban on tokenized equities, restrictive DeFi rules that could compromise privacy, and the elimination of stablecoin rewards which would favor traditional banks over crypto competition.

How does the GENIUS Act relate to this new market structure bill?
The GENIUS Act, signed into law previously, established a framework specifically for payment stablecoins. The CLARITY Act is a broader crypto market structure bill that addresses the overall market, including how all digital assets are classified and traded.

What happens next for the CLARITY Act?
The Senate Agriculture Committee has scheduled a markup for January 27, 2026. This period is being used as a "cool-down" phase for stakeholders to resolve differences regarding stablecoin rewards and DeFi oversight before a formal vote is taken.