Coinbase, Kraken, Gemini Push to Loosen CLARITY Act Crypto Listing Rule

Coinbase, Kraken, and Gemini are pressing lawmakers to soften a CLARITY Act rule that could make it much harder for smaller crypto assets to get listed on U.S. exchanges.

• CLARITY Act fight: Exchanges want the “readily susceptible to manipulation” rule revised
• Main concern: Low-liquidity tokens may be blocked before they can prove demand
• Regulatory backdrop: The CFTC standard may be too blunt for spot crypto markets
• Industry position: They say this is not anti-regulation, but a call for workable crypto market structure

Coinbase, Kraken, and Gemini are lobbying lawmakers to revise a provision in the CLARITY Act that would require crypto exchanges to list only digital assets that are not “readily susceptible to manipulation.” According to a POLITICO report, three people familiar with the talks confirmed the effort, which has become the latest flashpoint in Washington’s long-running battle over U.S. crypto regulation, crypto exchange rules, and who actually gets to police digital asset markets.

The CLARITY Act is meant to bring order to crypto market structure, especially around the tug-of-war between the SEC and the CFTC. In plain English, it is one of the big attempts to answer a simple question lawmakers keep dodging: when a token is treated like a commodity, when is it a security, and what rules should exchanges follow if they want to list it? That’s not a small question. It is the kind of thing that decides whether the U.S. becomes a serious home for digital asset markets or keeps forcing the industry to improvise around half-baked regulatory landmines.

The part drawing fire mirrors traditional commodity-market safeguards. Under current CFTC practice, commodity-linked products are expected to be self-certified as not easily manipulated before trading begins. That sounds reasonable until you apply it to spot crypto markets, where many assets start with thin liquidity, limited trading history, and a tiny pool of buyers and sellers. In that environment, proving an asset is “not readily susceptible to manipulation” can become a circular mess: a token needs trading volume to look legitimate, but it may not get that volume unless an exchange lists it first.

That is the “chicken-and-egg problem” Coinbase Federal Policy Director Robin Cook pointed to. As he put it, the issue is

“how a token can generate enough trading volume and interest to demonstrate it is not a manipulation risk if the token can’t be listed in the first place.”

That is not a bad argument, and it gets to the heart of why this debate matters. Exchanges are not saying every random garbage token should get a free ride onto a major platform. They are saying that applying a futures-and-swaps style rule to spot crypto markets may be too rigid, especially for smaller tokens that still need a fair shot at building a market. If the standard is too strict, the only assets that clear the bar will be the ones that already have the biggest market share. Convenient for incumbents. Not exactly a roaring victory for innovation.

One source familiar with the discussions described the proposed edit as

“a very large walk back”

from earlier drafts, while another said the exchanges want

“light-touch regulation.”

That second phrase should make anyone in crypto pause. “Light-touch regulation” is often the polite wrapper people use when they want fewer headaches and more freedom to list assets without too many questions. Sometimes that is a legit push for flexibility. Sometimes it is just Wall Street cosplay with blockchain buzzwords. The truth usually lands somewhere in the middle.

To be fair, Coinbase, Kraken, and Gemini are not arguing for no rules. They say they support stronger federal oversight and expanded CFTC authority. They also argue that many Americans are already trading crypto without adequate federal protections, which is true enough. U.S. crypto regulation has been a patchwork of jurisdictional nonsense for years, and that vacuum has left plenty of room for manipulation, fake volume, pump-and-dump scams, and the usual circus of bad actors pretending to be “decentralized innovators.”

Here’s the real issue: manipulation is a genuine problem in low-liquidity markets. A token with thin trading can be pushed around more easily by coordinated buying, wash trading, or a few whales deciding to play games. Wash trading means the same entity buys and sells an asset to itself or through coordinated accounts to create the illusion of demand. Pump-and-dump schemes are even more shameless: hype the token, lure retail buyers, then dump the bag on them once price spikes. Crypto has seen enough of that nonsense to fill a landfill.

But regulators also need to understand that spot crypto markets are not identical to traditional commodities markets. In traditional finance, a product can often be tested, traded, and benchmarked within a more established system. In crypto, especially with newer assets, the market itself may be the proving ground. If lawmakers insist on the asset looking mature before it is allowed to trade widely, they may accidentally freeze out legitimate projects before they ever get a chance to show real demand.

The recommendation was submitted to the Senate Agriculture Committee, which oversees the CFTC and handles half of the CLARITY framework. That committee matters a lot here because the CLARITY Act is not just about one rule; it is about who controls the rails of U.S. crypto market structure. The SEC and CFTC have spent years circling each other like bureaucratic wrecking balls, and crypto keeps getting caught in the blast radius. The industry wants a clear lane. Washington keeps offering a maze with a few fresh paint marks on the wall.

For exchanges, the practical worry is simple: if the wording stays too strict, it could discourage listings of smaller, less-liquid tokens even when those assets are not obviously fraudulent. That may help protect consumers from junk, but it could also lock out emerging projects that need visibility to build real markets. In other words, a rule meant to stop manipulation could end up creating a market where only the biggest names get through the door. That is not exactly free and fair competition; it is more like compliance as a velvet rope.

For lawmakers, the challenge is obvious. Loosen the rule too much, and they risk giving shady issuers and market manipulators a softer runway. Keep it too tight, and they may turn U.S. exchanges into slow, overcautious gatekeepers that only list assets already proven in the wild. Neither outcome is ideal. The sweet spot is a standard that gives the CFTC enough authority to enforce investor protections without making token listings impossible for anything outside the top tier.

That balance is what the exchanges say they want. Their position is not that investor protections should disappear. It is that the rule should be workable for spot crypto markets instead of lifted wholesale from older commodity frameworks. That is a fair complaint, even if the industry’s track record means it should never be trusted blindly. Crypto firms love talking about “fair access” right up until someone asks how much shadiness they are comfortable tolerating in the name of growth. The answer, more often than not, is a bit too much.

Key questions and takeaways

• What are Coinbase, Kraken, and Gemini asking lawmakers to change?
  They want the CLARITY Act’s requirement that listed assets not be “readily susceptible to manipulation” revised so smaller tokens are not blocked from U.S. exchange listings.

• Why do they oppose the current wording?
  They say it could unfairly shut out low-liquidity tokens that need trading access before they can build enough volume to show they are legitimate.

• What does “readily susceptible to manipulation” mean?
  It means a token may be easy to push around with thin trading, wash trading, coordinated buys, or other artificial price moves.

• Are the exchanges asking for weaker regulation overall?
  They say no. Their public line is that they still support stronger federal oversight and expanded CFTC authority.

• Why does the CLARITY Act matter for crypto market structure?
  It is designed to define how digital asset markets should be regulated in the U.S., including the roles of the CFTC and, indirectly, the SEC.

• What is the biggest risk if the rule stays strict?
  It could lock smaller but legitimate tokens out of major exchanges, concentrating liquidity in a few large assets and making the market less competitive.

The debate is not really about whether crypto needs rules. It does. Plenty of them, frankly. The real fight is over whether those rules are smart enough to fit how digital asset markets actually function, or whether lawmakers will keep trying to hammer a new financial system into an old regulatory mold. If the CLARITY Act becomes too rigid, the result could be fewer listings, less competition, and more offshore activity where investor protections are even weaker. If it becomes too loose, the result is the usual scammer-friendly swamp.

That is the mess in front of Congress: protect investors without killing legitimate innovation. Not glamorous, not simple, and definitely not solved by pretending every token should be judged like a century-old commodity future. The exchanges have made their pitch. Now lawmakers have to decide whether they want a serious crypto market structure framework or another polished piece of legislation that sounds clean until it hits the ugly realities of liquidity, manipulation, and U.S. digital asset regulation.