Trump advisor insists crypto law is “only a matter of time” as CLARITY Act stalls
The Trump administration’s point man on digital assets has doubled down on the inevitability of comprehensive crypto regulation in the United States, even as momentum behind the much‑watched CLARITY Act has slowed and political fault lines inside the industry have deepened.
Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, argued that a federal framework for crypto market structure is no longer optional, but unavoidable. In his words, “There will be a crypto market structure bill — it’s a question of when, not if.”
His comments came amid growing frustration in Washington over the fate of the CLARITY Act, a flagship effort to codify how stablecoins, tokenized assets, and decentralized finance are treated under U.S. law. After an initial burst of progress, the latest Senate markup failed to move forward, and the probability of the bill becoming law in 2026 has slipped to around 40%, down from roughly even odds just a week earlier.
White House remains optimistic, but tensions flare with Coinbase
Officials close to the Trump administration still describe the White House as hopeful that the CLARITY Act can advance, but their patience with some industry players is wearing thin. In particular, Coinbase CEO Brian Armstrong’s decision to withdraw his company’s backing for the bill has clearly irritated key policymakers.
Armstrong has framed his position with the line “no bill is better than a bad bill,” pushing back hard on provisions he sees as hostile to innovation. Witt, however, portrayed that stance as a luxury made possible by the current administration’s generally supportive posture toward digital assets. He suggested that rejecting the bill outright carries real political risk.
According to Witt, such an absolutist attitude is “a privilege” afforded by having a pro‑crypto White House. If the industry squanders this window, he warned, it could find itself facing far more aggressive and “punitive” legislation from Democrats in the future.
“Don’t let perfect be the enemy of good”
The main message from Trump’s crypto advisor was a call for pragmatism and compromise. Acknowledging that the bill contains contentious elements, Witt urged stakeholders to keep working on improvements rather than walking away.
“Let’s keep working to improve the product, recognizing that compromises will need to be made in order to get 60 votes in the Senate,” he said, emphasizing that the filibuster threshold forces negotiation. “But let’s not let perfect be the enemy of the good.”
In other words, from the administration’s perspective, an imperfect but workable regulatory framework is better than continued ambiguity—or the specter of a future Congress that may be far less sympathetic to the sector’s concerns.
A divided industry: Armstrong vs. other crypto leaders
The rift over the CLARITY Act highlights how far from unified the crypto industry really is. Some influential figures are prepared to accept the current Senate draft largely as written. Ripple CEO Brad Garlinghouse and Carlos Domingo, head of tokenization platform Securitize, have both indicated they can live with the bill in its present form or with only limited tweaks.
Armstrong, on the other hand, has taken aim at several core elements. He has sharply criticized potential restrictions or outright bans on:
– Stablecoin yield products
– Tokenized stocks and similar tokenized securities
– Certain decentralized finance (DeFi) activities
For Coinbase and other platforms betting heavily on these verticals, such constraints are seen as existential threats to future growth. For more institution‑oriented players that focus on tokenization under clearer regulatory regimes, the bill’s current language looks more like a manageable compromise than a dealbreaker.
Banks vs. crypto? Novogratz calls out the politics of yield
Galaxy Digital CEO Mike Novogratz has homed in on one especially sensitive provision: the treatment of yield on stablecoins. He argues that the stablecoin yield issue has become a political battleground where traditional financial institutions are fighting to preserve their dominance in savings and payments.
Calling the situation “fascinating,” Novogratz suggested that fears about competition from digital dollars offering yield may ultimately “cost the bill,” blaming not only banks but also lawmakers who side with them. In his view, this is a case of “politics over good policy,” and he warned that if the bill fails, “the big loser will be the US consumer,” who could miss out on safer, more transparent on‑chain alternatives to opaque bank products.
Market sentiment turns cautious as timelines slip
The loss of momentum around the CLARITY Act has been quickly reflected in market expectations. While SEC Chairman Paul Atkins has publicly projected that the bill will eventually pass, prediction markets have grown more skeptical as the legislative process has dragged.
Recently, traders were effectively assigning a coin‑flip probability—around 50%—to the bill becoming law in the current timeframe. After last week’s stalled markup, those odds have eroded to roughly 40% for passage by 2026. That change signals not only concern about the specific disagreements over yields and DeFi, but also broader worries that the political calendar will soon work against any complex financial legislation.
As of now, the Senate has not released an updated schedule for the next markup session. The key question is whether negotiators can lock in a consensus on core market‑structure issues in January or during the first quarter of 2026, before election politics consume all available oxygen in Washington.
What’s actually at stake in the CLARITY Act?
Beneath the public sparring, the CLARITY Act is effectively a battle over who controls the future architecture of finance in the U.S. Among the key areas it seeks to address:
– Stablecoins: What licensing, reserves, disclosures, and yield rules apply to dollar‑backed tokens?
– Tokenized securities: How can stocks, bonds, and funds be issued and traded on‑chain without undermining investor protections?
– DeFi protocols: When does code become a regulated financial intermediary, and who is responsible for compliance?
– Market structure: Which regulators—securities, commodities, banking, or a combination—will oversee which parts of the ecosystem?
For companies seeking legal certainty to build long‑term products, even a compromise bill with strict guardrails might be preferable to the current patchwork of enforcement actions and conflicting guidance. For others, especially those invested in permissionless, high‑yield experimentation, some of the proposed rules look more like a straitjacket than a foundation.
Why the industry is split on compromise
The disagreement over “a good enough bill” versus “no bill at all” reflects deeper strategic differences inside crypto. Larger, better‑capitalized firms with strong compliance teams often favor a clear, if demanding, rulebook that allows them to expand within a defined perimeter. Smaller innovators and ideologically driven builders tend to fear that early regulation will freeze the status quo in favor of incumbents.
Armstrong’s opposition channels that second camp, arguing that a restrictive framework could lock out more open DeFi systems and deprive Americans of high‑yield, programmable financial tools. Supporters of the CLARITY draft counter that without some guardrails, the U.S. risks another wave of collapses, scandals, and regulatory crackdowns that could be far more damaging than temporary limits on specific products.
Witt’s warning about “punitive” future laws is aimed squarely at this fault line. From his vantage point, if the industry rejects a relatively friendly bill today, it may be in no position to resist a more hostile one tomorrow.
Political timing: the invisible force behind the bill
The clock may end up being the CLARITY Act’s most formidable opponent. As the 2026 political cycle intensifies, lawmakers will become increasingly wary of backing controversial tech‑finance legislation that can easily be attacked in campaign ads. Any new crisis—whether in traditional markets or crypto—could also sharply change the appetite for compromise.
This dynamic helps explain why the White House is pressing leaders to accept something less than their ideal version of the bill. The argument is that partial clarity now, passed under a relatively supportive administration, beats the risk of a future legislative wave written in the wake of a high‑profile failure or scandal.
What investors and builders should watch next
While the exact language of the CLARITY Act is still in flux, several signposts will indicate whether a breakthrough is coming:
– Whether a new Senate markup is scheduled in early 2026
– Signs of a softening position from major opponents, including Coinbase
– Any revised compromise on stablecoin yield and DeFi provisions
– Public statements from key swing senators on both sides of the aisle
Until those pieces fall into place, markets are likely to remain in a holding pattern—pricing in the possibility of a comprehensive framework, but discounting its probability as procedural delays pile up.
The bottom line: regulation is coming, one way or another
Despite the current stalemate, Witt’s core message is hard to ignore: a federal crypto market‑structure law is no longer a hypothetical; it is a matter of timing and political configuration. Whether it arrives as a negotiated compromise under a pro‑crypto administration or as a tougher package crafted in response to the next crisis may depend heavily on how the industry handles the CLARITY Act today.
For now, the odds have shifted against rapid passage, but the underlying trajectory remains the same. The U.S. is moving toward codifying how digital assets fit into its financial system—and the choices made in the next few months could shape that framework for years to come.