Coinbase CEO’s Change of Heart on Crypto Framework Stalls Key Senate Bill

Coinbase CEO Brian Armstrong flexed the power of his keyboard yesterday with a 162-word X post that stopped major crypto legislation in its tracks. After apparently speed-reading the latest draft of the nearly 300-page Clarity Act that dropped late Monday, Armstrong said that he no longer supports the proposed framework for regulating crypto. Hours later, the Senate postponed its markup scheduled for that day.

The Clarity Bill goes a step further than the Genius Act, the first major US crypto legislation, which laid down the legal groundwork for stablecoins last summer. But after months of tweaks to the Clarity Act, some folks in the crypto industry say it now goes a few steps too far. 

Clarity Loses Its Focus

The Clarity Bill was supported and influenced by industry leaders including Coinbase. The biggest US crypto exchange has been an active force in shaping crypto laws, pouring millions into congressional races to elect crypto-friendly legislators. Armstrong has headed to the Hill himself to advocate for clear crypto rules. But as the Clarity Act’s aim came into focus, Armstrong disagreed on several points:

• Armstrong said the current Clarity Act would give too much power over crypto to the Securities and Exchange Commission as opposed to the Commodity Futures Trading Commission. The SEC has harshly cracked down on crypto in the past, including by filing a now-dropped suit against Coinbase. He also said the bill gives the government too much access to customers’ financial info (privacy is key to crypto’s decentralized promise). 
• Another of Armstrong’s gripes hits closer to his wallet. The latest version of the bill doesn’t let companies reward stablecoin-owning customers with interest. Coinbase currently offers a 3.5% payout to some stablecoin owners. Banks have lobbied against interest rewards, which could make owning stablecoins similar to having a traditional deposit account. But Armstrong said banks just want to block competition. 

Now or Never: The crypto industry has been moving fast in the first year of President Trump’s second term to take advantage of his pro-crypto campaign promises (he said he’d make the US “the crypto capital of the planet”). Now, pushback from insiders risks delaying regulation for years — until a time when the US president doesn’t have his own line of NFTs. Armstrong wrote that, “We’d rather have no bill than a bad bill.” Be careful what you wish for.