Coinbase Chief Policy Officer Shirzad: The CLARITY Act Legislative Path is No Longer Viable, Don't Hold Out Hope
Faryar Shirzad, Chief Policy Officer of Coinbase, commented on the failure of the CLARITY Act to pass a key procedural vote in the Senate, stating that Congress has given its answer: "The legislative path is no longer viable, don't hold out hope for it."
Shirzad proposed an alternative path, suggesting that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) can utilize their existing authority to directly establish clear regulatory rules without waiting for new legislation from Congress.
He also noted that there are about seven weeks until the U.S. midterm elections, and that crypto industry voters should "fight back at the ballot box" against those lawmakers who voted against the key procedural vote.
This statement came after the CLARITY Act failed to meet the 60-vote threshold, with a tie of 50 votes for and 50 against; prior proposals from Senate Democrats had prevented the restoration of criminal safe harbor provisions for BRCA-related developers. House Financial Services Committee Chairman French Hill and Senate Banking Committee Chairman Tim Scott had previously expressed optimism about the bill's passage, while Shirzad's comments signal a clear strategic shift from leading industry firms following the legislative setback.
From a market mechanism perspective, Shirzad's proposed "shift to existing agency authority" path indicates that the next focus of industry lobbying resources will move from congressional legislative lobbying to direct communication and negotiation with the SEC and CFTC's rulemaking processes. The advantage of this path is that it does not require the bipartisan threshold of 60 votes in the Senate, but the disadvantage is that rules established through administrative rulemaking tend to be less stable than congressional legislation—future changes in government or leadership at regulatory agencies could lead to rules being modified or overturned. Additionally, his call for voters to "fight back at the ballot box" suggests that crypto industry lobbying resources will further tilt towards political donations and voter mobilization in the upcoming midterm election cycle. Who benefits: Leading exchanges that maintain good communication channels with the SEC and CFTC and are adept at lobbying for administrative rulemaking will be able to influence rule details more quickly under the new path; who is under pressure: small to medium-sized projects that had hoped for a one-time legislative solution to the industry's regulatory uncertainties now face a potentially volatile administrative rule environment due to changes in government, leading to further unpredictability in compliance costs.
Source: Public Information
ABAB AI Insight
Before joining Coinbase as Chief Policy Officer, Faryar Shirzad held several senior positions in the U.S. government, including serving as Deputy National Security Advisor for International Economic Affairs during the George W. Bush administration, and has extensive experience in federal government and congressional affairs. Since joining Coinbase, he has been a core leader in the company's lobbying efforts in Washington, previously advocating for crypto market structure legislation and litigation (such as Coinbase's lawsuit against the SEC to clarify crypto asset regulatory rules).
From a resource mobilization perspective, Coinbase has adopted a "multi-pronged approach" in regulatory lobbying in recent years—supporting congressional legislative lobbying and voter mobilization through industry political action committees (PACs) like Stand With Crypto, while also applying pressure on regulatory agencies through direct litigation and administrative rulemaking processes. Shirzad's clear statement to "shift to existing agency authority" indicates that the company's resource allocation focus will further shift from congressional lobbying to direct negotiation in SEC and CFTC rulemaking processes, while concentrating voter mobilization resources on the upcoming midterm election cycle.
A similar strategy of "shifting to existing agency authority after legislative obstacles" has historically appeared in areas such as environmental regulation (e.g., the U.S. Environmental Protection Agency advancing carbon emission rules using existing authority under the Clean Air Act after repeated legislative setbacks) and financial regulation. The current stage of the crypto industry marks a critical turning point from "betting on Congress for a one-time legislative solution to the regulatory framework" to "accepting administrative rulemaking by regulatory agencies as the main path," indicating that the focus of industry lobbying is shifting from legislative bodies to administrative agencies.
This essentially represents a structural adjustment in the "regulatory change" path itself: when the congressional legislative path is repeatedly obstructed by bipartisan disagreements, the way regulatory certainty is generated will shift from "one-time authorization by legislative bodies" to "administrative agencies making case-by-case discretionary decisions and gradually accumulating precedents." This shift occurs because the rulemaking process of administrative agencies does not require bipartisan majority support, only compliance with their existing statutory authority, making the threshold relatively lower; however, the cost is a decrease in the stability and predictability of rules, which can easily be adjusted with changes in the leadership of administrative agencies. Shirzad's call to "fight back at the ballot box" also reflects the industry's awareness that even if they shift to an administrative path, the appointment power of the leadership of regulatory agencies still lies with Congress and the President, making election outcomes a key variable influencing the long-term direction of regulation.
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