Coinbase, Kraken, and Gemini lobbied US lawmakers to remove anti-market manipulation language from the CLARITY Act, according to a Cointelegraph report posted May 9, 2026. The three exchanges argued the provisions were too broad and would create legal exposure for routine trading activity on their venues.
The CLARITY Act is the market structure bill the White House wants Congress to pass by July 4, 2026. It splits crypto oversight between the SEC and CFTC and sets rules for exchange registration, custody, and disclosures. The manipulation section was one of the few provisions written specifically to police behavior on centralized platforms.
The provision the exchanges want gone
The disputed language would have given the CFTC explicit authority to bring civil actions against exchanges and traders for spoofing, wash trading, and coordinated price manipulation on regulated crypto venues. It mirrored existing commodity market rules but added crypto-specific definitions to capture activity that does not always fit neatly into futures-market precedent.
According to the report, the three exchanges argued the definitions were vague enough to expose market makers and the platforms themselves to enforcement risk for ordinary liquidity provision. They pushed for the language to be narrowed or removed entirely and replaced with a self-regulatory framework written by the industry.
Crypto markets remained quiet on the news. Bitcoin traded at $80,148 (up 1.0% on the day) and Ether at $2,312 (up 1.8%) as of May 9, 2026, with the CoinMarketCap Fear & Greed index at 49, neutral. The lobbying push is a process story, not a price catalyst, but it shapes what the final bill actually does.
The timing pressure
The White House set a July 4 target for CLARITY Act passage, leaving a narrow window for amendments before floor votes. Provisions stripped now are unlikely to be reinserted later, since reconciliation between House and Senate versions tends to lock in language already negotiated. Industry lobbying landing in early May is well-timed to influence the final markup.
The three exchanges have an obvious commercial interest. Coinbase posted a $400M Q1 loss and cut 14% of staff earlier this month, and tighter manipulation rules would raise compliance costs at exactly the wrong time. Kraken's parent Payward acquired Reap for $600M and is pushing into stablecoin infrastructure where regulatory clarity is the main unlock. Gemini has been preparing for a public listing.
The enforcement gap without it
Without explicit anti-manipulation authority, the CFTC would have to rely on general fraud statutes to police spoofing and wash trading on crypto venues. Those statutes work, but they are slower to apply and harder to win, which is why every other commodity market got purpose-built rules layered on top.
Retail traders are the most exposed party. Wash trading inflates volume metrics that retail uses to judge liquidity. Spoofing distorts the order book at the exact moment a market order hits. On regulated futures venues, both behaviors are aggressively prosecuted. On crypto exchanges, enforcement has been thinner, and the CLARITY Act language was the closest thing to a federal-level fix.
Consumer-facing surfaces tied to these exchanges, including crypto cards that fund spending from exchange balances, sit downstream of whatever spot pricing the venue produces. Cleaner price formation matters for users who treat their exchange balance as a payment account, not just a trading account.
The pushback
Some Democratic staffers pushed back internally, arguing that removing the manipulation section would gut the bill's consumer protection story and make Senate passage harder. The bill needs at least seven Democratic votes in the Senate to clear cloture, and the manipulation language was one of the talking points moderate Democrats had been using to defend supporting it.
Whether the final bill keeps the language, narrows it, or drops it will be visible when the House Financial Services Committee posts its markup text. That markup is expected before Memorial Day.
Overview
Three of the largest US crypto exchanges asked Congress to strip anti-manipulation provisions from the CLARITY Act, per Cointelegraph's May 9 report. The bill is on a July 4 deadline, the language was one of the few crypto-specific consumer protections in the draft, and the markup that determines whether it survives is weeks away.
