Coinbase Backs Out of U.S. Crypto Clarity Bill

“We’d rather have no bill than a bad bill,” Armstrong wrote on X.

What’s the issue?

The bill, nearly 300 pages long, attempts to establish how digital assets should be regulated. It divides oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). However, Armstrong believes the legislation leans far too heavily in the SEC’s favor.

According to Armstrong, the bill effectively:

• Bans tokenized equities, which could block innovation around blockchain-based securities.
• Restricts DeFi, by granting the government broad surveillance powers over user financial data.
• Strips power from the CFTC, making it secondary to the SEC.
• Kills stablecoin rewards, a move that benefits traditional banks while hurting crypto platforms like Coinbase.

These restrictions, he argues, represent a step backward for American crypto innovation. Moreover, Coinbase generates substantial revenue from stablecoin products like USDC yields, making the proposed yield ban a direct threat to their business model.

Strategic timing

Armstrong’s statement dropped just hours before the Senate Banking Committee was scheduled to begin its review of the bill and a flurry of amendments. This last-minute opposition is being viewed by analysts as a strategic move to pressure lawmakers into revising the legislation.

Coinbase, one of the biggest players in the U.S. crypto space, has previously lobbied for clear regulation. But this version of the bill, Armstrong said, would leave the industry worse off than the current regulatory uncertainty.

“Crypto needs to be treated on a level playing field with the rest of financial services so we can build this industry in a safe and trusted way in America,” he added.

Industry response: Mixed

Armstrong’s stance sparked immediate reaction. Some praised Coinbase’s decision, calling it a necessary stand against government overreach. Others, however, came to the bill’s defense.

• Ripple CEO Brad Garlinghouse called the bill “a massive step forward” for crypto clarity.
• Coin Center expressed optimism that the bill protects developers and decentralized tools.
• The Digital Chamber, a crypto advocacy group, confirmed its ongoing support while pushing for targeted improvements.

On the other hand, Galaxy Digital’s head of research described the bill as the largest expansion of financial surveillance powers since the Patriot Act.

The bigger picture And What’s Next ?

Coinbase’s withdrawal highlights a deepening rift between regulators and industry leaders. While the bill may still proceed, the lack of unified support from key players like Coinbase could delay or derail it altogether.

Crypto regulation in the U.S. continues to sit at a crossroads. The Clarity Act might still evolve, but for now, it faces growing resistance from those it claims to serve.