Coinbase policy chief calls the CLARITY Act “exactly backward” on national security, warning that regulatory uncertainty can aid bad actors

Coinbase’s chief policy officer, Faryar Shirzad, pushed back publicly on the CLARITY Act in remarks reported by Yahoo Finance, telling Sen. Elizabeth Warren that the bill is “exactly backward” in how it addresses national security risks tied to digital assets.

In the comments, Shirzad tied his critique to the role of regulatory clarity. He argued that when rules remain uncertain, it can create openings for “bad actors” to operate in the shadows, rather than under clear compliance expectations. His position contrasts with lawmakers who are looking to expand federal guardrails for crypto platforms through legislation like CLARITY.

The CLARITY Act, as characterized in the report, is aimed at subjecting crypto businesses to stricter federal oversight. Shirzad’s argument implies that oversight alone is not enough if the framework does not reduce uncertainty for compliant operators and does not define expectations in a way that discourages misuse.

The exchange comes at a time when U.S. policymakers are continuing to debate how to regulate cryptocurrency activity, including questions about consumer protections, market integrity, and the extent of federal involvement. For large trading and custody platforms like Coinbase, federal rules are especially consequential because they can determine what activities are permitted, what compliance systems must be built, and how quickly firms can expand offerings.

Coinbase, which operates a regulated crypto trading platform and provides custody-related services for customers, typically frames its policy stance around creating “clear” rules that enable the industry’s mainstream access while reducing regulatory fragmentation. In this reported discussion, Shirzad focused less on whether oversight is needed and more on whether the proposed bill’s design could inadvertently leave room for evasion or uncertainty that wrongdoers could exploit.

The reported comments also suggest a broader strategic divide that has played out across crypto policy debates. Some officials prioritize expanding federal authority through new legislation, while industry officials often emphasize the need for well-defined, enforceable standards that clarify how existing laws apply and what compliance looks like in practice.

What is not detailed in the reported account is the specific mechanism Shirzad says makes the bill “backward,” and whether he discussed particular provisions or alternative language. The report likewise does not indicate whether Coinbase would support a revised version of the legislation or pursue other legislative priorities that address national security concerns through a different structure.

For investors and market participants, the exchange underscores that the CLARITY Act discussion is not only about oversight intensity, but also about implementation and the practical effect on compliance behavior. The next developments to watch are whether lawmakers respond to Coinbase’s critique with amendments, and whether committee discussions clarify how the bill would reduce regulatory uncertainty rather than add new ambiguity for market participants.