Coinbase CEO Brian Armstrong has withdrawn his support for the US Senate crypto market structure bill, describing the latest draft as worse than having no legislation at all. Armstrong indicated that Coinbase could not support the bill after reviewing the Senate Banking Committee draft over the past 48 hours.
Armstrong suggested that the proposal would leave the crypto industry in a weaker position moving forward. This development occurs as the digital assets market is experiencing a bullish trend. The cumulative crypto market capitalization increased by 3% in the last 24 hours following the announcement of the bill. Bitcoin is showing signs of reclaiming the $98,000 mark, while Ethereum is aiming to surpass $3,500.
Coinbase CEO Flags Privacy Risks in Proposed Bill
In an X post, Coinbase CEO Brian Armstrong stated that the company would prefer no bill over what he characterized as a bad bill. He elaborated that the draft contains too many significant problems to be fixed through minor amendments. Armstrong warned that the text could potentially ban tokenized equities, restrict DeFi activity, and reduce user privacy by granting the government access to financial records.
According to Armstrong's assessment, the bill would weaken the role of the Commodity Futures Trading Commission (CFTC) and expand the authority of the Securities and Exchange Commission. He specifically criticized draft amendments related to stablecoins, noting proposals that would limit or eliminate rewards on stablecoins. He argued that such a move would enable banks to block competition and protect existing market players rather than consumers.
Armstrong further wrote, "We appreciate the hard work by members of the Senate to reach a bipartisan outcome. But this version would be materially worse than the current status quo. We would rather have no bill than a bad bill."
Coinbase intends to continue engaging with lawmakers and advocate for changes to the draft. Despite these concerns, Armstrong remains optimistic that a more favorable version could still emerge through further negotiations.
Extensive Amendments Filed for Crypto Bill
Significant public commentary followed the unveiling of the draft legislation for cryptocurrency by US senators. Lawmakers anticipate that the bill, if enacted, would clarify regulatory oversight for different segments of the crypto sector.
The crypto industry has been advocating for such legislation for years, citing numerous instances of hacks, scams, and rug pulls. A primary objective of the bill is to establish a clear definition of when a digital token should be classified as a security or a commodity, a distinction that has been a central point of contention between crypto firms and regulators.
The proposal aims to grant the CFTC authority to oversee spot crypto markets, an approach that has garnered support from a substantial portion of the industry. Many firms perceive the CFTC as a more principles-based regulator compared to the SEC. Banks have raised concerns that the payment of rewards on stablecoins could divert deposits from the insured banking system, potentially posing financial stability risks if large sums of money move into such products.
The draft has reportedly attracted over 137 proposed amendments to date. Lawmakers expect several modifications before any final vote takes place. Meanwhile, industry groups have accused banks of exerting considerable influence over the legislative process. Summer Mersinger, CEO of the Blockchain Association, stated that progress is being hindered by pressure from large financial institutions.
She commented that banks are attempting to reshape the bill to safeguard their market positions. Mersinger added that proposals to eliminate stablecoin rewards are designed to limit consumer choice and prevent new products from competing effectively.