Coinbase Withdraws Support for Digital Asset Market Clarity Act
Coinbase has withdrawn its backing for the Digital Asset Market Clarity Act, with CEO Brian Armstrong stating the current draft would be more damaging than beneficial for the U.S. crypto sector.
Armstrong said on Wednesday in a post on X that this version would be materially worse than the status quo and that it is preferable to have no bill than a bad one. He added that after reviewing the Senate Banking draft over the last 48 hours, Coinbase cannot support the legislation as written.
Coinbase CEO outlines objections to current draft
Armstrong cited several issues, including what he called a de facto ban on tokenized equities and broad restrictions on decentralized finance. He argued the proposal would grant the government unlimited access to financial records, creating significant privacy risks for consumers.
He also said the draft would reduce the Commodity Futures Trading Commission’s authority, slow innovation, and shift more power to the U.S. Securities and Exchange Commission, a key concern for the industry given the SEC’s regulation-by-enforcement approach under the Biden administration.
Source: Ryan Adams
Armstrong further echoed concerns that the draft could eliminate rewards on stablecoins and insulate banks from competition. Banking lobbyists have warned that offering users roughly 5% risk-free yields on stablecoins could trigger a deposit flight, with billions moving from low-interest bank accounts.
Industry reaction mixed
ETF analyst James Seyffart commented that the development is not what stakeholders want to see for clarity, adding that the industry needs a market structure bill.
Armstrong said he remains hopeful lawmakers will arrive at a suitable outcome, a view shared by other industry leaders. Ripple CEO Brad Garlinghouse said he is optimistic that issues can be addressed during the markup process, describing the measure as a major step toward workable crypto frameworks while maintaining consumer protections, and noting that the bill’s success would be crypto’s success.
The Senate Committee on Agriculture, Nutrition and Forestry has scheduled a Jan. 27 markup hearing, six days after the legislative text was released on Jan. 21. Earlier this week, SEC chair Paul Atkins said he is bullish about the chances of Trump signing the bill this year.
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