Concerns Regarding Current Draft Legislation

Coinbase CEO Brian Armstrong has announced that the company cannot support the current draft legislation on cryptocurrency market structure prepared by the US Senate Banking Committee. After reviewing the draft, Armstrong indicated that several clauses pose serious risks to the industry.

Specific Risks Identified by Armstrong

Armstrong's assessment highlighted several key issues within the draft. He stated that the draft effectively bans tokenized shares. Furthermore, it contains provisions concerning the Decentralized Finance (DeFi) space that could grant the government unlimited access to financial records, thereby weakening users' right to privacy. Armstrong also pointed out that the draft appears to erode the powers of the Commodity Futures Commission (CFTC), potentially shifting the regulatory balance heavily in favor of the Securities and Exchange Commission (SEC) and consequently stifling innovation within the sector.

Potential Negative Impacts on Stablecoins and Competition

Further concerns were raised regarding proposed changes that could eliminate stablecoin rewards. Armstrong also noted that the draft might grant banks the power to restrict competition. He argued that these potential outcomes would lead to worse consequences than the current status quo, leading him to declare, "We would rather have no law than a bad law."

Optimism for Future Negotiations

Despite his reservations about the current draft, Armstrong expressed appreciation for the efforts of Senate members in pursuing a bipartisan consensus. He conveyed optimism that continued negotiations could lead to a more balanced text that effectively addresses the needs of the industry.