Coinbase withdraws support hours before critical vote
Coinbase CEO Brian Armstrong announced that the company cannot support the Clarity Act in its current form. Armstrong made the declaration in a Wednesday night post on X, stating « we’d rather have no bill than a bad bill. » The withdrawal came just hours before the Senate Banking Committee was scheduled to debate and mark up the legislation on Thursday morning. Following Coinbase’s announcement, the Senate Banking Committee postponed the markup session that was originally scheduled for January 15, 2026.
Two sources told CoinDesk that the committee lacked sufficient votes to advance the bill regardless of Coinbase’s position at that time. A party-line vote appeared unlikely due to concerns from both Republican and Democratic members about various provisions in the draft legislation. Senator Ruben Gallego indicated he would vote no after White House crypto adviser Patrick Witt missed a planned meeting on ethics concerns.
Coinbase shares dropped approximately 2% in after-hours trading following Armstrong’s announcement on social media.
CEO cites tokenised equities ban and stablecoin restrictions as dealbreakers
Armstrong outlined multiple concerns with the Senate draft that led to Coinbase withdrawing its support for the comprehensive crypto bill. The draft legislation includes what Armstrong called a « de facto ban on tokenised equities » that would prohibit on-chain versions of stocks. This provision directly conflicts with Coinbase’s publicly stated plans to expand into tokenised equities as part of its 2026 « Everything Exchange » strategy. He also raised concerns about proposed amendments that would « kill rewards on stablecoins » offered to users holding these assets.
Coinbase reported $355 million in stablecoin-related revenue in the third quarter of 2025 and offers yields to holders of USDC. The company generated approximately $1.3 billion in stablecoin-related revenues throughout 2025, making this provision financially significant for the exchange. Additional concerns included diminishment of the Commodity Futures Trading Commission’s jurisdiction over digital commodities and spot markets. Armstrong also criticised provisions related to decentralised finance restrictions and government access to financial records that could compromise user privacy protections.
Banking lobby conflict over stablecoin yields threatens consensus
The most significant wedge issue going into the scheduled Thursday markup remained the battle over stablecoin yields between crypto firms and banks. The bank lobby has argued that allowing crypto companies to offer stablecoin rewards creates a loophole threatening the US financial system. Banks contend that stablecoin rewards could suction money out of traditional bank deposits, potentially destabilising the broader financial system gradually. The Treasury Department has estimated that approximately $6.6 trillion in bank deposits could be threatened by stablecoin competition over time.
A bipartisan group of senators offered a compromise in the CLARITY Act allowing crypto companies to offer yield for stablecoin-related transactions. However, Armstrong’s Wednesday post indicated Coinbase would take a hard-line approach rather than accept the proposed compromise on this issue. Without Coinbase’s backing, the fragile coalition of crypto firms, policymakers, and advocacy groups pushing for market structure reform appears fractured currently. Several analysts now believe the legislation is unlikely to advance in its current form, with chances of passage estimated below 70%.
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