Coinbase push Senate to loosen “manipulation” test for small-cap token listings

Coinbase, Kraken and Gemini are lobbying Senate Agriculture leaders to strip a “not readily susceptible to manipulation” standard from a flagship digital asset bill, warning it would effectively bar small, low‑liquidity tokens from regulated U.S. exchanges and hand the CFTC a veto over future listings.

Crypto’s biggest U.S. exchanges are quietly lobbying to strip a key investor‑protection clause from the Senate’s flagship digital asset bill, warning that it would make listing “small coins” on regulated venues nearly impossible.

According to Politico, Coinbase, Kraken and Gemini submitted redlines to the Senate Agriculture Committee earlier this year urging lawmakers to remove a requirement that registered “digital commodity exchanges” may list only tokens “not readily susceptible to manipulation.”

In a joint letter, the three firms told senators that “millions of Americans are participating in digital asset markets without the federal regulatory protections they deserve” and insisted that “every element of our legislative engagement has been aimed at changing that — by expanding oversight, not limiting it.”

They added that importing the Commodity Exchange Act’s high bar for futures and swaps — where contracts must be “not readily susceptible to manipulation” — into the spot market would “significantly raise the bar for listing smaller, less liquid tokens” and could be weaponized by a future CFTC chair “to throttle innovation” by simply refusing to certify new assets.

Inside the Senate’s digital commodity bill

The provision sits inside the Senate Agriculture Committee’s draft Digital Commodity Intermediaries Act, a market‑structure framework first floated in late 2025 by Chair John Boozman and Sen. Cory Booker to give the Commodity Futures Trading Commission explicit authority over “digital commodities.”

A client alert from McGuireWoods on the discussion draft notes that any trading facility offering a cash or spot market in a digital commodity would have to register as a “digital commodity exchange,” with obligations modeled on existing CFTC rules for futures venues. Exchanges “may list only digital commodities ‘not readily susceptible to manipulation’ and must certify each listing to the CFTC,” including analysis showing that the token meets statutory criteria and that the venue has adequate surveillance and safeguards. McGuireWoods

The Agriculture Committee advanced its portion of the bill along party lines in late January, as highlighted in a committee release, but everyone expects major surgery before it hits the Senate floor. Politico reports that Republicans will need Democrats on both the Agriculture and Banking Committees to sign off on a final package that can clear the 60‑vote filibuster hurdle, and negotiators are already trading edits across panels.

Crypto.news previously broke down that broader effort in a story on the updated Senate Agriculture draft, noting that it would, for the first time, put federally registered spot intermediaries for bitcoin and ethereum squarely under CFTC supervision while leaving the SEC in charge of securities tokens. The same story highlighted unresolved fights over DeFi, staking and stablecoin rewards that still stand between the draft and a bipartisan deal.

Why Coinbase, Kraken and Gemini are fighting this clause

For Coinbase, Kraken and Gemini, the manipulation test is existential for their long‑tail business. As Politico reports, the exchanges “strongly support the readily susceptible to manipulation standard in traditional futures and swaps markets,” but argue that “importing a standard that doesn’t make sense for spot crypto” would “inadvertently hamstring the agency, the industry [and] consumers.”

Paul Grewal, Coinbase’s chief legal officer, told Bloomberg earlier this year that the company could even reconsider its support for the overall market‑structure package if it ends up with restrictions that go beyond “enhanced disclosure requirements” for products like stablecoin rewards. Crypto.news’ coverage of that standoff in a story underscored that Coinbase sees the bill as a trade‑off: clearer CFTC rules on one side, potential constraints on its core business on the other.

Now the same pattern is playing out around small‑cap listings. As Politico notes, industry sources say exchanges are also lobbying Senate Banking Committee members to soften related language, warning that if the manipulation test stays intact, many “small, low‑liquidity tokens” will simply never make it to regulated platforms. Instead, they will trade only on offshore venues and in DeFi, exactly where U.S. regulators have the least visibility and leverage.

In a sense, this is the central tension of the bill that crypto.news flagged in its earlier story: Washington wants to drag crypto into a familiar derivatives‑style regulatory box, while the industry is trying to keep enough slack in the system to list riskier assets and offer yield without strangling the business model. The fight over one phrase — “not readily susceptible to manipulation” — is where those two instincts are now colliding.