Senate Banking Committee Postpones Crypto Bill Markup After Coinbase Withdraws Support

TLDR:

• Coinbase withdrew support for the 278-page crypto bill citing concerns over tokenized equities bans and DeFi restrictions.
• Major firms including Kraken, Circle, and Ripple, reaffirmed their commitment to the legislative process despite challenges.
• The bill’s amendments allegedly favor traditional banks through stablecoin yield restrictions and tokenization provisions.
• Chairman Tim Scott postponed the markup but confirmed all parties remain engaged in good faith negotiations.

Senate Banking Committee Chair Tim Scott announced Wednesday evening the postponement of a crucial markup session for comprehensive crypto market structure legislation. 

The decision came after Coinbase withdrew its support for the bill, citing significant concerns about provisions that would disadvantage the crypto industry. 

The 278-page legislation had been scheduled for markup on Thursday, representing months of bipartisan negotiations aimed at establishing regulatory clarity for digital assets.

Industry Backlash Triggers Withdrawal of Support

The crypto industry expressed mounting frustrations on Wednesday afternoon over proposed amendments to the market structure bill. 

Companies argued that lawmakers were making excessive concessions to traditional banks and financial institutions. 

Specific concerns centered on stablecoin yield restrictions and tokenization provisions that critics claimed favored legacy finance.

Coinbase CEO Brian Armstrong delivered a decisive blow around 4:00 p.m. when he announced the company’s withdrawal of support. 

In a post on X, Armstrong detailed multiple problematic elements affecting the legislation. His concerns included what he characterized as a de facto ban on tokenized equities and DeFi prohibitions that would grant the government unlimited access to financial records.

Armstrong further objected to provisions that would erode the Commodity Futures Trading Commission’s authority. 

The proposed changes would make the CFTC subservient to the Securities and Exchange Commission, he argued. 

Draft amendments targeting rewards on stablecoins drew particular criticism for allegedly allowing banks to eliminate competition.

“We appreciate all the hard work by members of the Senate to reach a bipartisan outcome, but this version would be materially worse than the current status quo,” Armstrong wrote. “We’d rather have no bill than a bad bill.” 

Despite the withdrawal, he expressed continued optimism about reaching better outcomes through ongoing engagement.

Path Forward Remains Uncertain Despite Continued Support

Several major industry players quickly moved to counter Coinbase’s withdrawal by reaffirming their commitment to the legislative process. 

Companies, including a16z, Circle, Paradigm, Kraken, and Ripple, issued separate statements supporting the markup. 

Trade associations such as Coin Center and the Digital Chamber also backed moving forward with negotiations.

Kraken co-CEO Arjun Sethi emphasized the importance of persistence through difficult negotiations. “It is easy to walk away when a process gets difficult. What is hard and what actually matters is continuing to show up, working through disagreements, and building consensus in a system designed to require it,” Sethi said on X. 

The statements collectively aimed to prevent other undecided senators from viewing Coinbase’s exit as grounds for opposition.

Chairman Scott addressed the postponement in a statement announcing the delay. “I’ve spoken with leaders across the crypto industry, the financial sector, and my Democratic and Republican colleagues, and everyone remains at the table working in good faith,” Scott stated. However, he provided no specific timeline for rescheduling the markup session.

The Senate will be out of session next week for Martin Luther King Jr. Day. The Senate Agriculture Committee had also postponed its own markup originally scheduled for Thursday. 

Whether the Banking Committee’s delay affects the Agriculture Committee’s timeline remains unclear. The core issues that sparked Wednesday’s conflict will likely dominate future negotiations as stakeholders work toward a consensus.

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