Coinbase CEO Brian Armstrong said late Tuesday that the company can no longer support the U.S. Senate’s Cryptocurrency Market Structure bill after lawmakers introduced significant changes to the CLARITY Act.
He said the Senate Banking Committee’s draft plan “destroys important parts of the market structure” and creates risks for tokenized equities, DeFi, stablecoins, and open crypto markets.
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CLARITY law changed
Coinbase withdrew its support hours before the Senate was scheduled to move the bill to committee markup.
At the same time, sources on Capitol Hill are circulating unconfirmed reports that the markup scheduled for tomorrow could be withdrawn in response to Coinbase’s move.
Although the reports remain rumors, they highlight the growing political risks surrounding the bill.
Armstrong outlined four major concerns in his statement. The de facto ban on tokenized stocks means that blockchain-based stocks and financial products cannot be freely traded on crypto infrastructure.
The Coinbase CEO believes the bill will expand government access to DeFi transaction data by pushing decentralized protocols into bank secrecy laws and anti-money laundering regimes.
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In particular, the latest changes give the SEC broader control over the cryptocurrency market. This could bring Gensler-era issues back into the industry.
Finally, he said the draft includes provisions regarding stablecoins and banks that would allow banks to limit competition and limit crypto-native rewards.
What changed with the Senate rewrite?
The Senate Banking Committee has not voted on the House-passed CLARITY Act. Instead, a complete rewrite known as a “replacement nature modification” is used.
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This draft bill makes several major changes to how the U.S. cryptocurrency market is regulated.
Let me briefly list what has changed.
Coinbase is the largest regulated cryptocurrency exchange in the United States and one of the industry’s most vocal policy voices in Washington.
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The bill’s public withdrawal signals to lawmakers that the bill may lose industry support at a critical juncture.
This is important because the Senate Banking Committee and Senate Agriculture Committee will need bipartisan support to advance the bill.
What will happen to the CLARITY Act in the future?
The Senate was expected to begin raising committees this week. That’s when lawmakers formally debate and vote on amendments.
However, following Coinbase’s statement, some policymakers are now saying that leaders may delay or increase the price increase to avoid a collapse in public support.
For now, the bill remains in flux. But the fight over who controls cryptocurrencies, stablecoins, and DeFi in the United States is clearly at its most vulnerable stage yet.
