Coinbase CEO Brian Armstrong spoke out against a new proposal from Senate Democrats that could restrict decentralized finance (DeFi) in the United States.
The plan, sent to the Senate Banking Committee this week, seeks to impose stricter rules on crypto apps and wallets.
Senate Democrats Push for Tighter Crypto Market Regulation, Coinbase CEO Raises Concern
A new plan from Senate Democrats has drawn strong reactions from the crypto industry.
The proposal could place decentralized finance platforms on a “restricted list” if they are seen as risky.
It also suggests adding Know Your Customer (KYC) checks to crypto app frontends, including non-custodial wallets used by individuals.
The proposal was sent by Democrats on the Senate Banking Committee to their Republican colleagues on October 9.
Reports say it also removes legal protections for crypto developers. Many in the industry believe that these steps would be difficult to follow and could push developers and investors away from the United States.
Apart from the Coinbase CEO, Summer Mersinger, CEO of the Blockchain Association, said the proposal would “effectively ban decentralized finance, wallet development, and other applications” in the country.
She added that the rules would make compliance nearly impossible and that they risk slowing down progress in financial technology.
Mersinger urged lawmakers to continue discussions and find a solution that encourages responsible innovation.
Coinbase and Others Raise Concerns
Coinbase CEO Brian Armstrong shared his thoughts on X, formerly Twitter, saying, “We absolutely won’t accept this.”
He described the plan as a bad idea that would prevent the United States from leading in crypto innovation.
He said Coinbase would keep working with Congress to shape fair and clear rules for the industry.
Other industry figures also expressed concern. Jake Chervinsky, a well-known crypto lawyer, said the plan could destroy the progress made on the CLARITY Act.
This a bipartisan bill passed by the House in July. He said the new plan does not regulate digital currencies, it bans crypto.
Gabriel Shapiro, founder of MetaLeX Labs, said the proposal could punish U.S. nationals who use DeFi platforms that appear on the restricted list and earn recurring income from them.
In a similar stance to that of Coinbase CEO, Armstrong, He warned that it could lead to what he described as a government takeover of an entire sector.
Many fear that such steps would drive crypto developers and companies to move their projects overseas.
This could make the U.S. lose its position as a major player in digital finance.
Industry Groups Call for Balanced Regulation
Several organizations have called for a more balanced approach to crypto regulation.
Zunera Mazhar, Vice President of Government and Policy Affairs at the Digital Chamber, said the proposal is too heavy-handed and would only push innovation abroad.
She suggested that lawmakers focus on the real problem areas where illicit finance occurs instead of targeting DeFi platforms.
According to her, good policy does not punish decentralization, she said. It protects consumers and tackles risks where they actually happen.
The Senate Democrats’ proposal also appears to conflict with the bipartisan Responsible Financial Innovation Act introduced last month.
That act seeks to give the Commodity Futures Trading Commission more authority over crypto spot markets and limit the role of the Securities and Exchange Commission.
Reports say the Democrats behind the crypto regulation counter-proposal include Mark Warner, Ruben Gallego, Andy Kim, Raphael Warnock, Angela Alsobrooks, and Lisa Blunt Rochester.
Some critics believe the plan could undo the recent progress made toward fairer crypto regulations in the U.S.
As the debate continues, the future of DeFi in the country is still unclear.
Industry figures like Coinbase CEO, Brian Armstrong have said they’ll keep engaging with lawmakers to make sure innovation in the space isn’t held back by tough regulations.
Source: https://www.thecoinrepublic.com/2025/10/10/crypto-market-news-coinbase-ceo-opposes-senates-anti-defi-proposal/
