Coinbase CEO Brian Armstrong pulls support for crypto bill on eve of Senate vote

Coinbase CEO Brian Armstrong said his company would not support the latest version of crypto market structure legislation in the US Senate, saying it gave too much power to the Securities and Exchange Commission.

Other issues Armstrong cited include the bill’s “defacto ban on tokenised equities,” “DeFi prohibitions,” and proposed amendments that would further restrict companies’ ability to pay “rewards” on users’ stablecoin holdings.

“We appreciate all the hard work by members of the Senate to reach a bi-partisan outcome, but this version would be materially worse than the current status quo,” Armstrong wrote on X.

“We’d rather have no bill than a bad bill.”

His salvo comes less than 24 hours before Senators on the Banking Committee are scheduled to begin a marathon vote on the bill and dozens of proposed amendments.

The Clarity Act is a nearly 300-page attempt to settle a long-running debate over the regulatory status of cryptocurrencies.

Crypto entrepreneurs, investors, and attorneys in the US have long said that major crypto assets should be regulated by the Commodity Futures Trading Commission rather than the more stringent Securities and Exchange Commission, arguing the assets were more like commodities such as gold or wheat than company equity.

But the Senate version of the Clarity Act would give the SEC the final say in determining whether a token was subject to its oversight or that of the CFTC.

Armstrong called it an “erosion of the CFTC’s authority” on Wednesday.

The bill also forbids companies from paying passive yield on users’ stablecoin holdings, a major victory for banks that had warned the dollar-pegged tokens could undermine their ability to lend to businesses and homebuyers.

Instead, it allows companies to offer rewards or incentives on activities such as transactions, payments, transfers, remittances, and providing liquidity in DeFi protocols.

Armstrong wasn’t the only one to slam the bill since it was introduced on Monday.

The Senate’s Clarity Act marks the most significant expansion of government financial surveillance power since the 2001 USA Patriot Act, Galaxy research head Alex Thorn said in a note shared with DL News.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can contact him at aleks@dlnews.com.