Major US crypto exchange Coinbase says it has withdrawn its support for the Digital Asset Market Clarity Act, with CEO Brian Armstrong arguing that it would cause far more harm than good to the crypto industry in its current form.
“This version would be materially worse than the current status quo. We’d rather have no bill than a bad bill. Hopefully we can all get to a better draft,” Armstrong said in an X post on Wednesday.
“After reviewing the Senate Banking draft text over the last 48hrs, Coinbase unfortunately can’t support the bill as written,” Armstrong said.
Coinbase CEO raises several concerns in draft bill
Armstrong flagged several concerns, including what he described as a “defacto ban” on tokenized equities and sweeping restrictions on decentralized finance, arguing the proposal would grant the government “unlimited access” to financial records and raise serious privacy risks for consumers.
He also argued that the draft takes power away from the Commodity Futures Trading Commission, slows innovation, and hands more authority to the US Securities and Exchange Commission, which is a major concern for the crypto industry given the SEC’s “regulation by enforcement” approach under the Biden administration.
Armstrong also echoed a fear shared by many in the industry that the current draft could “kill rewards” on stablecoins and is designed to shield banks from competition.
Banking lobbyists have warned that offering users roughly 5% risk-free yields on stablecoins could trigger a “deposit flight,” with billions pulled from low-interest bank accounts.
Industry participants are divided on the outcome
ETF analyst James Seyffart commented on Armstrong’s post, saying this is “not what we wanna see/hear with regard to CLARITY.” “This industry needs a market structure bill,” Seyffart said.
However, Armstrong is hopeful lawmakers will ultimately reach the “right outcome,” a sentiment shared by other executives across the industry.
Ripple CEO Brad Garlinghouse said he remains “optimistic that issues can be resolved through the mark-up process.”
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“A massive step forward in providing workable frameworks for crypto, while continuing to protect consumers,” Garlinghouse said. “This bill’s success is crypto’s success,” he added.
The Senate Committee on Agriculture, Nutrition and Forestry has set Jan. 27 for its markup hearing, six days after the release of the legislative text on Jan. 21.
Earlier this week, SEC chair Paul Atkins said he’s “bullish” on the chances of Trump signing the bill this year.
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