Coinbase, the largest US crypto exchange, abruptly pulled its support for the Senate's version of the CLARITY Act, leading to the cancellation of a key markup session. The move, announced hours before the planned vote, has drawn sharp criticism from industry leaders and the White House, who view it as a setback for bipartisan crypto regulation. CEO Brian Armstrong cited concerns over provisions that could hinder innovation and favor traditional banks.
The CLARITY Act aims to establish a clear regulatory framework for digital assets in the US, distinguishing between securities and commodities, and assigning oversight between the SEC and CFTC. The House passed its version months ago with bipartisan support, and the White House has signaled readiness to sign it into law. However, the Senate Banking Committee drafted its own substitute amendment, introducing changes that prompted Coinbase's withdrawal on January 17, 2026, just before a midnight deadline ahead of the January 18 markup.
Coinbase CEO Brian Armstrong stated on X, 'We’d rather have no bill than a bad bill,' blaming big banks' lobbyists for influencing provisions that restrict crypto innovation. The company highlighted four key objections: limits on tokenized equities, expanded government access to decentralized finance (DeFi) transaction data under anti-money-laundering laws, broadened SEC authority over crypto markets, and stablecoin rules that could prevent users from earning yields and allow banks to curb competition.
Senate Banking Committee Chairman Tim Scott (R-SC) canceled the markup, describing it as a 'brief pause' for renegotiation. Senator Cynthia Lummis expressed frustration but emphasized the need for federal standards. The White House, viewing the bill as a priority under President Trump, reacted strongly, with sources calling Coinbase's action a 'rug pull' and affirming, 'This is President Trump's bill at the end of the day, not Brian Armstrong's.'
Most industry figures urged compromise. Kraken CEO Arjun Sethi said, 'The right response to outstanding issues is to resolve them not to abandon years of bipartisan progress.' Similar sentiments came from Ripple CEO Brad Garlinghouse, a16z's Chris Dixon, and White House advisor David Sacks. Analyst Michaël van de Poppe even suggested the stalling could benefit the industry by avoiding unfavorable terms.
With midterm election campaigns starting in March, time is short for the Senate Banking and Agriculture committees to align the bill before floor time becomes scarce. Delays risk pushing innovation overseas, where regions like Europe (with MiCA) already have unified rules, leaving US firms in regulatory uncertainty.
