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The White House is thinking about pulling its support for a major crypto regulation bill after Coinbase suddenly withdrew its backing.
A source close to the Trump administration said officials were caught off guard by Coinbase’s decision. The administration is reportedly angry, calling Coinbase’s move a “rug pull” that hurt not just the White House but the wider crypto industry.
Officials claim Coinbase did not warn them before going public with its opposition. Because of this, the White House may fully walk away from the Digital Asset Market Clarity Act. However, the administration could stay involved if Coinbase returns to talks and agrees to a compromise.
The biggest sticking point is stablecoins, especially rules around yield-bearing stablecoins. Banks are worried that allowing stablecoins to offer around 5% returns could pull money out of traditional savings accounts. The source emphasized that this is “President Trump’s bill,” not one controlled by Coinbase or its CEO, Brian Armstrong.
Coinbase says it pulled support because the bill, in its current form, could harm the crypto industry. Armstrong said it is better to have no bill than a bad one. He raised concerns that the proposal could effectively ban tokenized stocks, place heavy restrictions on decentralized finance (DeFi), and give the government broader access to users’ financial data, which could hurt privacy.
Armstrong also warned that the bill weakens the Commodity Futures Trading Commission while giving more power to the Securities and Exchange Commission. The SEC has faced strong criticism from the crypto industry for relying heavily on enforcement actions instead of clear rules.
Reactions within the crypto community are mixed. Some support Coinbase, saying lawmakers are protecting banks at the expense of innovation. Others argue that Coinbase is just one exchange and should not have the power to block legislation that affects the entire crypto industry.
Read more on InsideBitcoins.com
