White House Reconsidering Crypto Bill Support
The White House is currently evaluating whether to withdraw its support for a comprehensive crypto market structure bill. This reconsideration follows Coinbase's decision to retract its backing, as reported by Eleanor Terrett of Fox Business. According to a source close to the Trump administration, officials were taken by surprise by Coinbase's action and are now questioning the viability of the legislation proceeding without broader industry consensus.
In a social media post on X, Terrett indicated that the administration expressed strong dissatisfaction with what they termed Coinbase's unilateral decision to withdraw from the Digital Asset Market Clarity Act. The source described this move as a betrayal against the White House and the wider crypto industry, emphasizing that officials were not informed beforehand.
The same source suggested that the administration might completely abandon the bill unless Coinbase re-engages in discussions and agrees to modifications concerning stablecoin yield provisions. "This is President Trump’s bill at the end of the day, not Brian Armstrong’s," the source stated, as quoted by Terrett.
The level of policy risk associated with U.S. crypto regulation remains significant. The evident disagreement between the White House and a major cryptocurrency exchange highlights the ongoing fragility of consensus regarding market structure rules.
Coinbase Withdraws Support Citing Bill's Flaws
Coinbase stated that it could not endorse the Senate Banking Committee draft in its present form. Chief executive Brian Armstrong articulated that the proposal would introduce more complications than it resolves. He expressed a preference for no bill over a poorly constructed one, stating, "We’d rather have no bill than a bad bill. Hopefully we can all get to a better draft."
Armstrong identified several key concerns with the draft. He argued that it would effectively prohibit tokenized equities, impose extensive restrictions on decentralized finance, and expand governmental access to financial records in ways that could compromise user privacy. Furthermore, he warned that the bill would shift regulatory authority further towards the Securities and Exchange Commission (SEC) at the expense of the Commodity Futures Trading Commission (CFTC).
This particular concern is shared by a substantial portion of the crypto industry, which has previously criticized the SEC for prioritizing enforcement actions over the establishment of clear regulatory guidelines. Coinbase has consistently advocated for market structure legislation that clarifies oversight rather than consolidating authority within a single agency.
Stablecoins Become Central to the Dispute
Stablecoins have emerged as one of the most contentious elements within the proposed bill. Armstrong indicated that the current draft poses a risk of "killing rewards" on stablecoins, a feature that has attracted users seeking yields approaching 5% on dollar-backed tokens.
Banking organizations have voiced concerns that such yields could divert deposits from traditional savings accounts, potentially creating instability within the banking system. Conversely, critics argue that these concerns are exaggerated and stem more from banks' desire to mitigate competition rather than genuine systemic risk.
The White House source, as cited by Terrett, suggested that the provisions related to stablecoin yields are now a critical point of negotiation. Without a compromise that accommodates the interests of the banking sector, the administration may opt to withdraw its support for the bill.
Stablecoins continue to represent a significant political dividing line. Any regulatory framework established in the U.S. that limits yields could lead to substantial shifts in demand across both decentralized finance (DeFi) and centralized platforms.
Industry Divisions Exposed by Fallout
The recent developments have brought to light significant divisions within the cryptocurrency community. Many users have supported Coinbase's decision, arguing that the bill unfairly favors established institutions and banks over open financial systems. Nic Carter, cofounder of Coin Metrics, expressed this sentiment on X, stating, "Then the banks should stop trying to screw everyone over."
Others hold a different perspective, believing that Coinbase's stance was an overreach, treating its support as indispensable for legislation impacting the entire sector. One user commented, "Coinbase is not crypto. Coinbase is one exchange in crypto," reflecting concerns that a single entity should not possess veto power over U.S. policy decisions.
This divergence highlights a persistent tension within the industry: large, regulated firms often seek practical compromises with lawmakers, while developers and users within decentralized systems resist regulations they perceive as undermining core principles.
Uncertain Future for Digital Asset Market Clarity Act
The immediate outlook for the Digital Asset Market Clarity Act remains uncertain. Should the White House proceed with its threat to withdraw support, the bill could face significant delays or outright failure, postponing the implementation of comprehensive market structure rules once again.
Such an outcome would leave the industry operating under the current status quo, characterized by fragmented oversight, a heavy reliance on enforcement actions, and ongoing disputes between regulators and cryptocurrency firms. It would also serve as a signal that even with considerable political momentum, cryptocurrency legislation can quickly falter when key stakeholders withdraw their backing.