CEO Armstrong cites token bans, DeFi restrictions, and regulatory imbalance as lawmakers delay key digital assets legislation.
Coinbase CEO Brian Armstrong announced that the leading U.S. crypto exchange is pulling its backing from the Senate Banking Committee’s recently released crypto market structure bill.
After reviewing the draft for roughly 48 hours, Armstrong said the company could not endorse it in its current form. Coinbase has been actively involved in shaping U.S. legislation designed to clarify how cryptocurrencies and exchanges are regulated.
In a post on X, he pointed to “too many issues,” including what he called an effective ban on tokenized equities, rules that could hinder DeFi and privacy protections, and provisions that weaken the CFTC while giving the SEC more discretion. He also flagged language that would restrict certain stablecoin-related rewards.
Senate Halts Crypto Bill
The Senate Banking Committee abruptly postponed a planned markup of the sweeping bill following Coinbase’s public withdrawal, undercutting momentum for what had been promoted as Washington’s next major attempt at setting “rules of the road” for digital assets.
Committee Chairman Tim Scott confirmed the markup would be delayed as negotiations continue, without providing a new date.
He emphasized that lawmakers and stakeholders “remain at the table,” suggesting the committee is still pursuing a bipartisan path forward.
Key Issues: Token Classification, CFTC Authority, Stablecoin Rewards
The bill seeks to clarify when digital tokens qualify as securities or commodities, placing spot-market oversight largely with the CFTC, an outcome long sought by industry participants.
However, it has also become a battleground over stablecoin rewards, with banks pushing lawmakers to block crypto platforms from offering yield-like incentives resembling deposit interest.
Coinbase argues that banning these rewards could make compliant stablecoin use less appealing, slow mainstream adoption, and weaken the business case for U.S.-based regulated exchanges compared with offshore competitors.
Why This Matters
The bill was meant to clarify how cryptocurrencies are regulated in the U.S., but its stall highlights the ongoing struggle to fit digital assets into existing financial rules.
Past efforts, like the 2022 Lummis-Gillibrand bill, have also faced roadblocks. With federal legislation delayed, the industry may have to navigate a patchwork of enforcement actions, court rulings, and state-level rules.
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