- Coinbase says the draft crypto bill could harm DeFi, tokenization, and stablecoins.
- The proposal shifts power toward the SEC, raising concerns over enforcement-led regulation.
- Industry leaders remain divided as Congress moves toward a key markup hearing.
Coinbase has withdrawn its support for the Digital Asset Market Clarity Act, arguing that the proposed U.S. crypto bill could damage the industry rather than provide the certainty lawmakers promise. The decision puts fresh pressure on Congress just days before a key Senate hearing and highlights how divided the crypto sector remains over the best path to regulation.
Brian Armstrong, Coinbase’s CEO, said the company reviewed the latest draft from the Senate Banking Committee and found it deeply flawed. In his view, the bill introduces new risks without solving existing regulatory confusion. Coinbase, he said, would rather see no legislation than one that weakens innovation and consumer choice.
Why Coinbase Says the Bill Falls Short
Armstrong’s criticism centers on what he sees as overly restrictive rules for emerging crypto use cases. He warned that the draft could effectively block tokenized stocks and place heavy limits on decentralized finance platforms. Both areas are viewed as key growth drivers for the next phase of digital assets.
Another concern is privacy. According to Armstrong, the proposal could give government agencies broad access to financial data, raising red flags for both companies and users. For an industry built on transparency balanced with user control, that tradeoff is hard to accept.
Power Shift Toward the SEC Raises Concerns
Coinbase is also alarmed by a shift in regulatory authority away from the Commodity Futures Trading Commission and toward the Securities and Exchange Commission. Armstrong argues that the SEC has historically relied on enforcement actions rather than clear rulemaking, creating uncertainty for builders and investors.
The bill’s treatment of stablecoins has added to the tension. Armstrong suggested that it removes incentives tied to stablecoin adoption while favoring traditional banks. Banking groups have warned that yield-bearing stablecoins could pull deposits away from low-interest bank accounts, and Coinbase believes that influence is showing up in policy decisions.
Industry Split as Hearing Approaches
Not everyone in crypto agrees with Coinbase’s stance. ETF analyst James Seyffart said the industry urgently needs a market structure law, even if the current version is imperfect. From his perspective, delay carries its own risks.
Coinbase’s chief policy officer, Faryar Shirzad, has been more direct, saying the banking sector has significant sway in Washington. He stressed that Coinbase’s priority is making stablecoins easy and practical for everyday users.
Meanwhile, Ripple CEO Brad Garlinghouse struck a more optimistic tone. He believes the bill’s flaws can be addressed during the amendment process and sees it as a meaningful step toward clearer rules that protect users while encouraging innovation.
The Senate Committee on Agriculture, Nutrition, and Forestry is scheduled to hold its markup hearing on January 27, only days after the bill text became public. Despite industry pushback, SEC Chairman Paul Atkins has said he expects the legislation to reach President Trump’s desk this year.
Also Read: Crypto Giants Clash Over US Regulation as Bitcoin Nears $98K
Whether Coinbase’s withdrawal reshapes the bill remains to be seen. What’s clear is that the fight over how to regulate crypto in the U.S. is far from settled—and the outcome will shape the market for years to come.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of CoinBrief.io. Before making any investment decisions, you should always conduct your own research. CoinBrief.io is not responsible for any financial losses.
