Coinbase, Warren Spar Over CLARITY Act's National Security Impact

Coinbase Chief Policy Officer Faryar Shirzad pushed back against Senator Elizabeth Warren’s claim that the CLARITY Act would weaken U.S. national security. In a July 11 post on X, he called the crypto bill a strict security mandate. “This isn’t a free pass for crypto,” he wrote.

Shirzad said the proposal would place crypto brokers, dealers, and exchanges under Bank Secrecy Act duties. Those duties include anti-money laundering programs and suspicious activity reporting. He pointed to provisions that let platforms pause suspicious transfers when law enforcement requests action. The bill would also create a new Treasury power, Special Measure 6. That tool lets officials target foreign jurisdictions, institutions, or transaction types tied to digital asset money laundering risks.

The Senate Banking Committee’s fact sheet says the bill applies federal anti-money laundering and counterterrorism finance rules to centralized digital asset intermediaries. It would increase FinCEN funding, require risk controls at digital asset firms, and create a government-industry information-sharing program. The proposal also regulates crypto kiosks and requires studies on mixers, illicit finance, cyber risks, and national security threats.

Warren took the opposite position. She shared an article by Richard Nephew, a former National Security Council director for Iran, and wrote: “As currently drafted, the Clarity Act is a ticket to sanctions evasion.” Nephew argued that the bill could leave some decentralized finance participants outside clear Bank Secrecy Act duties and make enforcement harder.

The dispute centers on which crypto businesses must register, monitor transactions, and answer to federal agencies. Warren and other critics say exemptions for some non-custodial services could leave gaps that foreign governments, criminal groups, and sanctioned entities may use. A Senate Banking Committee minority advisory raised similar concerns. Supporters say existing sanctions laws would remain in force while the bill adds new Treasury and FinCEN powers. Shirzad argued that unclear crypto rules today give bad actors room to operate outside firm regulatory boundaries. He said the bill would move more digital asset activity into a federal compliance system rather than leave it under fragmented oversight.

Senate staff plan to release a merged CLARITY Act draft during the week of July 13, according to crypto.news. The new text will combine work from the Banking and Agriculture committees. Negotiators have reportedly added more than 70 pages, including stronger consumer protections and changes requested during bipartisan talks.

Senate leaders target possible floor action during the week of July 20. Several disputes remain open. Lawmakers continue to negotiate ethics rules, stablecoin rewards, decentralized finance protections, and legal safeguards for software developers. Senator Ron Wyden wants the final bill to retain protections for developers who do not control customer funds, crypto.news reported.

The House approved an earlier version of the bill in July 2025. The Senate Banking Committee advanced its draft by a 15-9 vote in May 2026. Both chambers must approve matching text before the bill can reach the president. The Senate starts its August recess on August 7, leaving limited time for debate and amendments.

The national security dispute adds another test for supporters seeking enough Democratic votes for passage before lawmakers leave Washington for summer. If Warren’s critique gains traction among moderate Democrats, the bill’s path could narrow. If the merged draft addresses the decentralized finance exemptions she and others cite, support could broaden. Shirzad’s pushback is part of a broader lobbying campaign to frame the bill as a security measure rather than a deregulation effort. The Treasury’s new Special Measure 6 could also be used to target foreign exchanges or mixers, a provision that may appeal to national security hawks. The final text will show which side’s language carries.