Coinbase Breaks With Senate Crypto Bill as Banking Committee Heads to Showdown

• Coinbase CEO Brian Armstrong has withdrawn support for the US Senate’s draft crypto market structure bill, saying that it would be “materially worse than the current status quo.”
• Armstrong cited a number of issues he has with the bill in relation to tokenised equities, restrictions on DeFi that will harm users’ privacy, and thwarting rewards on stablecoins.
• Others in the crypto industry have voiced their support for the bill, including Ripple CEO Brad Garlinghouse, lobbying organisations The Digital Chamber and Coin Center, and stablecoin issuer Circle.

Coinbase CEO, Brian Armstrong, has declared on X that the exchange can’t support the US Senate Banking Committee’s draft version of the crypto market structure bill released January 12, writing that the legislation in its current form would be “materially worse than the current status quo.”

After spending the past 48 hours carefully going over the text of the draft bill, Armstrong said he’d identified several significant issues, which, taken together, he considers deal-breakers, including: 

• A “de facto ban on tokenised equities”;
• Restrictions on DeFi, which Armstrong claims would give government access to users’ financial records and remove their right to privacy;
• Weakening of the Commodity Futures Trading Commission’s regulatory role over crypto, making it subservient to the Securities and Exchange Commission and “stifling innovation”; and
• Draft amendments which Armstrong says would “kill rewards on stablecoins, allowing banks to ban their competition.”

Armstrong said that while he appreciates the work of the Senators who drafted the bill, he and Coinbase would “rather have no bill than a bad bill.” 

In response to Armstrong’s announcement, pro-crypto Republican Senator Cynthia Lummis said she believes “it’ll have a profound impact on the process.”

The Coinbase CEO indicated that he’ll continue to push for changes to the draft to transform it into a document which would strengthen and support the US crypto industry.

“We’ll keep fighting for all Americans and for economic freedom,” Armstrong said. 

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.

Brian Armstrong, Coinbase CEO.

The bill was scheduled for markup Thursday morning US time by the Senate Agriculture Committee, which this week was postponed until late January. A scheduled markup by the Banking Committee, also scheduled for January 15, was cancelled at the last minute in response to “today’s drama with Coinbase”, according to journalist Eleanor Terrett. 

Markup refers to the process of debating amendments and finalising the text of a bill before it heads to the Senate floor. Lawmakers have proposed over 75 amendments to the draft bill, though many of these will be rejected or voted down during the markup process. Still, it’s likely the final text will differ substantially from the draft.

Following his post withdrawing Coinbase’s support for the draft bill, Armstrong made another post saying he remains hopeful of a positive outcome.

“I’m actually quite optimistic that we will get to the right outcome with continued effort. We will keep showing up and working with everyone to get there.”

Related: Coinbase Warns Lawmakers: Stablecoin Reward Limits Could Upend Crypto Bill

Other Crypto Industry Figures React to Draft Bill

While Armstrong is critical of the Senate’s draft bill, the broader crypto industry is not united in this view.

Ripple CEO, Brad Garlinghouse, has praised the bill on X, calling the draft bill a “massive step forward in providing workable frameworks for crypto, while continuing to protect consumers.” 

Ripple (and I) know firsthand that clarity beats chaos, and this bill’s success is crypto’s success.

Brad Garlinghouse, Ripple CEO

Another voice in support of the bill has been a crypto lobbying organisation, the Digital Chamber, which released a statement on X stating it “strongly supports advancing market structure legislation and remains committed to seeing a bill signed” this year.

The Digital Chamber added that “while the Senate Banking Committee draft is a work in progress, we are actively pushing for targeted improvements and offering amendments to strengthen it.”

Related: Goldman Sachs Sees Regulatory Shift Fuelling Next Phase of Crypto Adoption

A few hours after Armstrong’s tweet withdrawing Coinbase support for the draft bill, crypto journalist and host of the Crypto In America podcast, Eleanor Terrett, tweeted that many important players in the crypto industry have declared their support, naming stablecoin issuer Circle, investment fund a16z, crypto exchange Kraken and lobbying group Coin Center — in addition the The Digital Chamber and Ripple.

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