Three of the United States’ largest crypto exchanges—Coinbase, Kraken, and Gemini—are pushing lawmakers to make a significant change to the anticipated CLARITY Act, the long-awaited framework for the crypto market that has been delayed for months in Congress. 

According to a Friday report by POLITICO, the companies have urged lawmakers to scrap one key provision that would require exchanges to list only digital assets that are “not readily susceptible to manipulation.”

The recommendation, shared with lawmakers earlier this year, was confirmed to POLITICO by three people familiar with the discussions. 

The provision they want removed is intended to mirror existing commodity-market safeguards, but the exchanges argue it could be difficult to apply fairly to crypto—especially to smaller tokens that trade less frequently.

Under the current approach of the Commodity Futures Trading Commission (CFTC), platforms seeking to list products tied to commodities such as oil or corn must self-certify that the underlying contracts are not easily manipulated or artificially inflated before they can begin trading. 

The exchanges’ objections center on a practical problem: the “readily susceptible to manipulation” standard could make it harder for exchanges to provide the certifications needed to offer smaller, lower-liquidity tokens. 

In the words of one of the people familiar with the matter, the proposed edit represented “a very large walk back” from earlier drafts of the bill. Another person said the exchanges want “light-touch regulation.” At the same time, the companies pushed back against the idea that they are trying to dilute investor protections.

In a joint statement provided to POLITICO, Coinbase and Kraken and Gemini said they support comprehensive oversight for digital asset markets, including giving the CFTC expanded authority. 

The exchanges said that many Americans participate in crypto markets without the federal protections they believe should apply. They added that their legislative engagement has been aimed at expanding oversight, not reducing it.

Coinbase Federal Policy Director Robin Cook described the debate as a “chicken-and-egg problem.” The issue, she said, 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. 

Cook said the company supports the “readily susceptible to manipulation” standard in traditional futures and swaps markets, but argued that importing that same standard into spot crypto could unintentionally limit what the CFTC, the industry, and consumers can do.

The exchanges’ suggested change was submitted as part of a broader set of recommendations to lawmakers on the Senate Agriculture Committee, the panel that oversees the CFTC and is responsible for half of the CLARITY framework. 

Featured image created with OpenArt, chart from TradingView.com

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