White House may drop Clarity Act after Coinbase pulls support

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White House may drop Clarity Act

Coinbase warns draft could damage DeFi and stablecoin innovation

Coinbase CEO Brian Armstrong said the exchange cannot support the Senate Banking Committee draft as written, arguing it contains provisions that could restrict DeFi, weaken user privacy, and potentially chill tokenized equity initiatives. He framed the decision as strategic rather than emotional, saying the industry should prefer “no bill” over a framework that locks in harmful rules. Armstrong also criticized what he sees as a shift in oversight power toward the SEC at the expense of the CFTC, warning it could extend the enforcement-heavy posture that defined prior years.

Stablecoins are the biggest flashpoint, with Coinbase and many crypto advocates resisting language that would curb rewards, which they argue are a legitimate way to share treasury-like returns with users. Banking groups, meanwhile, claim stablecoin yields could drain deposits from the traditional system, a risk lawmakers have increasingly taken seriously. The clash sets up a high-stakes tradeoff: protect bank funding stability, or allow stablecoins to compete directly as a yield-bearing “cash alternative.”

Industry split deepens as yield fight becomes the real battle

The reaction across crypto has been sharply divided, with some siding with Coinbase for drawing a hard line against bank-friendly restrictions, and others warning one company shouldn’t hold effective veto power over national legislation. Prominent voices argued that if banks fear deposit flight, the solution is better consumer pricing — not limiting stablecoin competition through regulation. Others countered Coinbase may have overplayed its hand by escalating tensions with the White House at a moment when bipartisan progress seemed possible.

The broader backdrop is that stablecoin yield has turned into a trillion-dollar political fight, because it touches the core business model of banks: cheap deposits and lending spreads. If the administration does step back from the bill, it could delay market structure clarity into deeper 2026, keeping US crypto policy stuck in negotiation mode. The outcome now depends on whether lawmakers can craft rules that preserve financial stability without neutering stablecoin utility — and whether Coinbase decides compromise is worth the price of a deal.

Recently we wrote that the adoption of the Digital Asset Market Clarity Act (CLARITY Act) in the US Congress has been delayed, as lawmakers acknowledge that its impact on digital asset markets is global and requires careful consideration of the interests of financial market participants.

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