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