Coinbase CEO Brian Armstrong raised four crucial points that he believes would make the legislation “materially worse” for the US crypto industry.
Update (Jan. 15, 2:32 am UTC): This article has been updated to include additional commentary from Coinbase chief policy officer Faryar Shirzad.
Major US crypto exchange Coinbase says it has withdrawn its support for the Digital Asset Market Clarity Act, with CEO Brian Armstrong arguing that it would cause far more harm than good to the crypto industry in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 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 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 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.
Coinbase chief policy officer Faryar Shirzad CNBC on Wednesday that “we understand that the bank lobby is very good at persuading members of Congress to protect its incumbency.”
“Our focus is on protecting the interest of consumers and that means making sure there are as few frictions as possible on the adoption of stablecoins,” Shirzad 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 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 , 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 the bill this year.
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