Coinbase CEO Brian Armstrong said the exchange cannot support the Senate Banking Committee’s latest draft of the CLARITY Act, warning that the bill, as written, would leave the US crypto industry worse off than the current regulatory status quo.
In a post on X, Armstrong cited several concerns, including what he described as a de facto ban on tokenized stocks, new restrictions on decentralized finance that could give the government broad access to users’ financial data, and provisions that weaken the Commodity Futures Trading Commission while expanding the Securities and Exchange Commission’s authority.
“After reviewing the Senate banking bill text over the past 48 hours, Coinbase unfortunately cannot support the bill as written,” Armstrong wrote.
He also criticized draft changes that would eliminate rewards on stablecoins, arguing that they would allow banks to suppress new competitors.
“We’d rather have no bill than a bad bill,” Armstrong said at X, adding that Coinbase would continue to push for a framework that treats crypto on a level playing field with traditional financial services.
The comments come a day before the Senate Banking Committee is expected to mark up the CLARITY Act on Thursday, January 15.
The legislation attempts to clarify the US structure of digital assets by defining categories such as digital commodities, investment contracts and stablecoins, while dividing oversight between the SEC and the CFTC.
Coinbase’s problems with stablecoin rewards
Stablecoin rewards have emerged as a flash point in the negotiations. Coinbase had reportedly warned lawmakers that they may withdraw support for the bill if it restricts dividend programs tied to stablecoins like USD Coin.
Coinbase shares in interest income generated from USDC reserves and uses a portion of this income to offer incentives to users, including rewards of around 3.5% to Coinbase One customers.
Stablecoin-related revenue could have reached $1.3 billion by 2025, making the issue central to Coinbase’s business model.
Banking groups argue that profitable stablecoins could draw deposits away from traditional banks, while crypto firms counter that a ban on rewards would stifle innovation and push users toward offshore platforms.
“I’m actually pretty optimistic that we’ll get to the right result with continued effort,” Armstrong later wrote on X. “We’ll keep showing up and working with everyone to get there.”
Michael Saylor, executive chairman of Strategy, retweeted Armstrong’s post, showing his own support for the decision.