Coinbase CEO Brian Armstrong said Tuesday evening that the company can no longer support the U.S. Senate's crypto market structure bill after lawmakers introduced broad changes to the CLARITY bill.
He stated that the Senate Banking Committee's draft "breaks key elements of the crypto market structure" and poses risks to tokenized stocks, DeFi, stablecoins, and open crypto markets.
The CLARITY bill has just changed
Coinbase withdrew its support for several hours before the Senate was set to move the bill to committee work.
At the same time, sources from Capitol Hill relay unconfirmed reports that the planned committee work for tomorrow may be canceled following Coinbase's move.
The news remains speculative, but it shows growing political risk associated with the bill.
Armstrong listed four main concerns in his statement. In effect, banning equity in token form means that stocks and financial instruments based on blockchain cannot freely trade on crypto infrastructure.
Coinbase's CEO believes the bill expands government access to DeFi transaction data, forcing decentralized protocols to comply with banking secrecy laws and anti-money laundering regulations.
It is important that the latest changes give the SEC broader control over crypto markets. This could once again put the industry at risk under Gensler's era.
Finally, he stated that the bill includes provisions on stablecoins and banks that allow banks to limit competition and restrict crypto-native rewards.
What has changed in the revised Senate version
The Senate Banking Committee is not voting on the bill CLARITY passed by the House of Representatives. Instead, it is using a full amendment called a "complete rewrite".
This bill introduces several major changes to how American crypto markets will be regulated.
Here is a simple comparison of the changes.
Coinbase is the largest regulated crypto exchange in the United States and one of the most active voices in the industry's political sphere in Washington.
A public withdrawal of support signals to lawmakers that the bill may no longer have industry backing at a critical moment.
This matters because Senate banking and agriculture committees need bipartisan support to move the bill forward.
What's next for the CLARITY bill?
The Senate was set to begin committee work this week. This is the moment when lawmakers formally debate and vote on amendments.
However, following Coinbase's statement, some political observers believe leaders may delay or cancel committee work to avoid a public loss of support.
For now, the bill remains in limbo. The fight over who controls crypto, stablecoins, and DeFi in the U.S. has clearly entered its most delicate phase.