A growing dispute over stablecoin rewards is threatening the future of the Digital Asset Market Clarity Act. This proposed bill is one of the most important crypto bills in America.
Coinbase CEO Brian Armstrong has defended his company’s decision to withdraw support for the legislation. This decision has triggered strong backlash from the White House and raised fears that the bill could stall or collapse.
White House Pushback and Political Fallout
Reports say senior figures close to the Trump administration reacted strongly to Coinbase’s decision. The company pulled its support for the bill just before a key Senate Banking Committee markup. This has increased concerns that the bill could stall or collapse altogether.
Sources say the White House could drop the bill completely. This may happen unless Coinbase returns to talks and helps address banking concerns, especially around stablecoins.
Despite the tension, the White House has not addressed the public. This silence has added to the crypto market pressure and broader uncertainty to crypto regulation.
Stablecoin Yield at the Core of the Conflict
The main dispute is about stablecoin rewards. Banking groups warn that if crypto firms are allowed to pay yield on stablecoins, customers could move money out of traditional savings accounts. They argue this could weaken banks and create broader financial risks.
To address this, the Senate draft tried to stop crypto firms from paying rewards just for holding stablecoins. It still allowed rewards tied to real use, like transactions, staking, or providing liquidity.
The company rejected this compromise, saying stablecoin rewards are important for fair competition in finance.
The outcome of the debate carries major financial implications for Coinbase. Analysts at S&P Global expect the company to generate more than $1 billion in stablecoin-related revenue in 2025.
Much of that income comes from distribution payments tied to Coinbase’s partnership with Circle, the issuer of the USDC stablecoin.
Limits on stablecoin rewards could sharply cut this revenue stream. Coinbase views these restrictions as a direct threat to its business model and long-term growth.
Armstrong Pushes Back Against Bank Influence
Armstrong says the fight is about banks using regulation to block competition. He argues crypto firms should compete under rules similar to traditional finance.
He said the White House pushed Coinbase to talk with banks and that discussions are ongoing. While he called the talks constructive, he believes the Senate draft favors banks and limits innovation.
Coinbase’s withdrawal did not rest on stablecoin yield alone. Armstrong pointed to additional provisions in the bill that he believes would harm the crypto ecosystem.
These include limits that would effectively block tokenized equities. They also add restrictions on decentralized finance (DeFi) and expand government access to financial data.
In addition, the changes would shift authority away from the CFTC and toward the SEC. Together, these issues led Coinbase to pull back from the bill, increasing political and industry tensions.