Coinbase Chiefs Back CLARITY, Argue Stablecoins Aren’t Deposits

Coinbase Chief Legal Officer Paul Grewal and Chief Policy Officer Faryar Shirzad endorsed the Digital Asset Market Clarity Act and argued that privately issued stablecoins are not bank deposits and should be backed one-to-one by cash and short-dated U.S. Treasuries. The executives pushed back on commentary questioning whether private digital dollars pose systemic risk to the U.S. economy.

Grewal framed stablecoin oversight as a matter of managing risk, access and oversight rather than a public-versus-private debate. He compared privately issued money to private healthcare and transportation and said regulators should focus on the rules that apply to issuers. Grewal wrote in a statement: “Money that’s ‘private’ isn’t any more inherently risky than healthcare or security or transportation that’s private. It’s how you manage that risk, as well as access and oversight that matters. CLARITY promotes all this.”

Shirzad expanded the argument in a policy response, noting that roughly 90% of M2 already consists of privately issued instruments, including commercial bank deposits and money market fund shares. He highlighted the GENIUS stablecoin framework, enacted last July, which requires payment-token issuers to hold cash and short-dated U.S. Treasuries one-to-one against outstanding tokens and bans loans, leverage and fractional reserves. On May 25 Shirzad wrote: “By statute, they hold cash and short-dated US Treasuries 1:1 against on-demand claims. No loans.”

Coinbase officials pointed to monthly reserve attestations and the real-time, on-chain visibility of stablecoin balances as transparency measures that differ from bank deposits. They argued those features reduce the run and leverage risks that typically prompt heavier regulation of depository institutions.

The endorsements were made as the Senate Banking Committee moves the CLARITY bill to a full floor vote. Industry support at this stage could affect final language on permitted stablecoin yield and market structure. Sponsors will need to reconcile any Senate changes with the House-passed bill before the midterm elections in November, leaving a limited legislative window.

CLARITY, formally the Digital Asset Market Clarity Act, would set rules for reserve requirements, disclosures and permissible activities for payment-token issuers. Backers say the bill would create a clearer framework for stablecoin issuance, while critics have raised concerns about potential risks to financial stability.