Coinbase CLO: Clarity Act will pass; urges banks to accept

At Consensus 2026, Coinbase Chief Legal Officer Paul Grewal said he is very confident the Clarity Act will pass before summer ends and urged the banking industry to accept the Tillis-Alsobrooks compromise on stablecoin rewards. He described the updated bill as preserving activity-based rewards while restricting balance-based or “idle” yield.

Grewal said activity-based rewards, which tie yield to actual platform use, remain allowed under the compromise. The balance-based rewards model that banks warned could encourage deposit shifts is limited by the revised language, he said, and Coinbase views the change as maintaining a key part of its stablecoin business.

Addressing the banking trade directly, Grewal urged support for the bill and warned against rejecting the compromise. “I very much encourage the banking trade to not snatch defeat from the jaws of victory,” he said, adding a direct appeal: “Accept yes for the answer and move on.”

On the banks' central objection — that paying rewards on stablecoin balances would spur customers to move deposits away from banks — Grewal said meetings with banking groups produced no substantive evidence to back that claim. He said participants raised the argument repeatedly but did not provide proof. “There's zero evidence of this,” he added.

Grewal contrasted the Tillis-Alsobrooks compromise with another federal proposal, the GENIUS Act, which he described as allowing non-issuers to offer a wide range of rewards. He argued the current compromise is preferable to the broader alternative, though he did not predict how banks would respond.

Grewal also addressed prediction markets and regulatory jurisdiction. He said Congress granted the Commodity Futures Trading Commission exclusive authority over event contracts, a point some states are contesting in court. Ongoing litigation in state and federal courts could ultimately require a Supreme Court decision, he said.

He pointed to the 2024 U.S. presidential election as an example of prediction markets performing differently from polls, saying that market forecasts offered a different signal on the outcome. Grewal argued that CFTC-regulated event contracts remove the house edge in traditional books and may offer a structural advantage as user bases grow.

On the broader regulatory debate, Grewal declined to frame the issue in partisan terms and said U.S. policy should aim to let crypto compete fairly in global markets. He praised the chairs of the SEC and the CFTC for engaging with the technology and said concerns about international competition, including with China, should shape policymaking.

Background: The Clarity Act is a Senate bill intended to set federal rules for stablecoins and related services. The Tillis-Alsobrooks compromise narrows allowable rewards by preserving activity-linked programs and limiting balance-based yields. Coinbase CEO Brian Armstrong and other company leaders opposed earlier versions of stablecoin legislation but shifted to publicly support the revised bill in early April after negotiations with lawmakers and regulators. The Senate is preparing a markup of the updated Clarity Act while litigation over prediction market regulation continues in multiple courts.