Coinbase Pulls Support Of CLARITY Act, Citing Restrictions

Coinbase CEO Brian Armstrong recently expressed his concerns about the Senate Banking Committee’s latest draft of the CLARITY Act, stating that the exchange cannot support the bill in its current form. Armstrong highlighted several issues with the proposed legislation, including what he described as a de facto ban on tokenized equities, restrictions on decentralized finance that could compromise users’ financial data privacy, and provisions that weaken the Commodity Futures Trading Commission while expanding the Securities and Exchange Commission’s authority.

In a post on X, Armstrong emphasized that the bill, if passed as is, would leave the U.S. crypto industry in a worse position than the current regulatory environment. He specifically called out draft amendments that would eliminate rewards on stablecoins, arguing that such a move would allow traditional banks to suppress emerging competitors in the crypto space.

“We’d rather have no bill than a bad bill,” Armstrong stated, underscoring Coinbase’s commitment to advocating for a regulatory framework that treats crypto on par with traditional financial services. The CEO made it clear that Coinbase will continue to push for a level playing field for the crypto industry.

The timing of Armstrong’s comments is significant, as they come just ahead of the Senate Banking Committee’s scheduled markup of the CLARITY Act on January 15. The legislation aims to provide clarity on the digital asset market structure in the U.S. by defining categories such as digital commodities, investment contracts, and payment stablecoins, while delineating oversight responsibilities between the SEC and CFTC.

One of the key sticking points in the negotiations has been stablecoin rewards, with Coinbase reportedly warning lawmakers that it may withdraw support for the bill if it restricts yield programs tied to stablecoins like USD Coin. Coinbase derives a significant portion of its revenue from stablecoin-related activities, with reports suggesting that stablecoin rewards may have generated $1.3 billion in revenue for the exchange in 2025.

The debate around stablecoin rewards has pitted banking groups against crypto firms, with the former arguing that yield-bearing stablecoins could divert deposits away from traditional banks, while the latter contend that banning rewards would stifle innovation and drive users to offshore platforms.

Despite the current impasse, Armstrong remains optimistic that a favorable resolution can be reached through continued dialogue and collaboration. He reiterated Coinbase’s commitment to engaging with stakeholders to achieve an outcome that benefits the entire crypto industry.

Support for Armstrong’s stance was evident on social media, with Michael Saylor, executive chairman of Strategy, retweeting Armstrong’s post and signaling his support for Coinbase’s decision.

In conclusion, Coinbase’s stance on the CLARITY Act reflects the broader challenges facing the crypto industry as it seeks to navigate a complex regulatory landscape. The outcome of the Senate Banking Committee’s markup will undoubtedly have far-reaching implications for the future of crypto regulation in the U.S. and beyond.