White House Signals Potential Withdrawal of Support
The White House has indicated it may retract its support for a significant crypto market structure bill following a sudden disagreement with Coinbase. This development, as reported by journalist Eleanor Terrett, has reintroduced uncertainty regarding the possibility of a consensus among crypto firms, banks, and legislators in Washington.
According to a source close to the Trump administration, the White House could abandon its backing for the bill if Coinbase does not agree to yield rules. This source emphasized that the administration's objective is to achieve an outcome that is satisfactory to banks and facilitates the continuation of negotiations.
Furthermore, officials reportedly felt blindsided by Coinbase's actions this week, viewing the move as a significant setback for the broader effort to pass the bill.
The source also conveyed that the White House views the bill as a national policy initiative rather than a campaign solely for a single company. Consequently, the administration is not inclined to allow any single firm to dictate the process. The reported anger stems from what officials characterized as an unexpected and unilateral shift by Coinbase.
Coinbase Expresses Opposition to the Draft Bill
On Wednesday, Coinbase CEO Brian Armstrong announced that the company could not support the current draft of the Senate Banking Committee bill. He contended that the proposal could stifle innovation across critical cryptocurrency sectors. Additionally, he warned that certain provisions within the bill might restrict tokenized equities and impose stricter regulations on decentralized finance.
Armstrong also voiced concerns about the potential for expanded government access to financial records, stating that the draft could compromise user privacy protections. Moreover, he criticized the proposed balance of power among regulatory bodies, arguing that the bill could diminish the role of the CFTC while increasing the influence of the SEC.
Stablecoins have emerged as another focal point of contention. Armstrong indicated that the bill could impose limitations on yield-generating opportunities for stablecoins. He suggested that legislators might be seeking to protect banks from increased competition, as banking groups have previously expressed concerns that stablecoin yields could draw deposits away from traditional savings products.
Legislators Seek a Path Forward
The broader cryptocurrency community has shown a divided reaction to Coinbase's stance. Some users have endorsed its position, attributing the resistance to change to the banking industry. However, others are concerned that this conflict could impede progress at a crucial juncture.
Several senators have indicated their continued commitment to advancing the bill. Senator Mark Warner stated that legislators can find a way to maintain ongoing discussions. Nevertheless, the exact timeline remains uncertain, with some analysts anticipating potential delays extending into February.
Senator Cynthia Lummis also suggested that the legislative process might slow down as stakeholders re-evaluate their next steps. In parallel, Mike Novogratz, CEO of Galaxy Digital, predicted that the CLARITY Act could be passed within two weeks following recent Senate meetings.