The White House is reportedly considering withdrawing its support for a cryptocurrency market structure bill. This potential move follows a similar decision by the crypto exchange Coinbase to withdraw its backing for the legislation. The information comes from Fox Business reporter Eleanor Terrett, who cited a source close to the Trump administration.
In a post on X, Terrett reported that the White House is furious over Coinbase’s decision to pull its backing for the Digital Asset Market Clarity Act. The administration views Coinbase's action as a "unilateral" move that blindsided officials.
"The White House is said to be furious with Coinbase’s “unilateral” action on Wednesday, which it apparently was not notified of in advance, calling it a “rug pull” against the White House and the rest of the industry," Terrett wrote, quoting her source.
The source further indicated that the administration might abandon the bill entirely unless Coinbase re-engages in negotiations. A key point of contention is a compromise on stablecoin yield provisions that would satisfy banking interests. "This is President Trump’s bill at the end of the day, not Brian Armstrong’s," the source stated.
Coinbase Cites Risks to DeFi and Stablecoins
On Wednesday, Coinbase CEO Brian Armstrong announced that the exchange could not support the Senate Banking Committee's draft bill in its current form. Armstrong argued that the bill, as written, would cause more harm than good. "We’d rather have no bill than a bad bill. Hopefully we can all get to a better draft," he stated.
Armstrong highlighted several specific concerns. He described a provision that would act as a de facto ban on tokenized equities. Additionally, he pointed to broad restrictions on decentralized finance (DeFi) and expanded government access to financial records, which he believes could compromise user privacy.
He also warned that the proposal could weaken the Commodity Futures Trading Commission (CFTC) while consolidating more power with the Securities and Exchange Commission (SEC). The SEC has faced criticism from the crypto industry for its enforcement-heavy approach in recent years.
Stablecoins represent another significant point of contention. Armstrong expressed concern that the draft bill risks "killing rewards" on stablecoins. This echoes broader industry fears that the bill is designed to protect traditional banks from competition. Banking groups have voiced concerns that allowing users to earn approximately 5% yields on stablecoins could lead to substantial deposit outflows from conventional savings accounts.
Crypto Community Remains Divided
Coinbase's stance has garnered support from many users who accuse lawmakers and banks of prioritizing established financial institutions over innovation. Nic Carter, co-founder of Coin Metrics, voiced this sentiment on X, stating, "Then the banks should stop trying to screw everyone over."
Conversely, others argue that Coinbase has overstepped its bounds and should not possess veto power over legislation that has implications for the entire industry. One user commented on X, "Coinbase is not crypto. Coinbase is one exchange in crypto."