Coinbase CEO Brian Armstrong has withdrawn support for the US Senate's Clarity Act, a major crypto regulation bill, citing excessive power granted to the Securities and Exchange Commission and other restrictive measures. His opposition, voiced just before a key committee vote, has introduced uncertainty to the long-debated legislation. The bill aims to clarify the regulatory status of cryptocurrencies but has drawn mixed reactions from the industry.
The Clarity Act, a nearly 300-page bill introduced on Monday, seeks to resolve ongoing debates over cryptocurrency regulation in the US. It proposes that major crypto assets be overseen primarily by the Commodity Futures Trading Commission (CFTC) rather than the more stringent Securities and Exchange Commission (SEC), likening them to commodities like gold or wheat. However, the Senate version grants the SEC final authority to determine whether a token falls under its oversight or the CFTC's, which Armstrong described as an "erosion of the CFTC’s authority" in a Wednesday post on X.
Armstrong announced Coinbase's opposition late Wednesday, less than 24 hours before the Senate Banking Committee's scheduled marathon vote and amendment session on Thursday. He highlighted several issues, including the bill's "defacto ban on tokenised equities," "DeFi prohibitions," and limits on companies paying "rewards" on users’ stablecoin holdings. The legislation forbids passive yield on stablecoins—a win for traditional banks concerned about competition—but permits incentives for activities like transactions, payments, and liquidity provision in decentralized finance (DeFi) protocols.
"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."
Criticism extends beyond Coinbase. Galaxy research head Alex Thorn called the bill the most significant expansion of government financial surveillance since the 2001 USA Patriot Act. Yet supporters rallied quickly. The Digital Chamber stated it "strongly supports advancing market structure legislation" and is pushing amendments. Ripple CEO Brad Garlinghouse praised it as "a massive step forward in providing workable frameworks for crypto, while continuing to protect consumers." Coin Center executive director Peter Van Valkenburgh expressed optimism, noting alignment with protecting software developers and decentralized tools.
This development throws the bipartisan effort into chaos, underscoring divisions within the crypto sector over balancing innovation and regulation.
