Coinbase CEO Brian Armstrong said late Tuesday night that the company can no longer support the U.S. Senate's version of the cryptocurrency market structure bill after lawmakers introduced major changes to the CLARITY Act.
He stated that the Senate Banking Committee's draft "breaks key elements of market structure" and increases risks regarding tokenized securities, DeFi, stablecoins, and open cryptocurrency markets.
Clarity Act just changed
Coinbase withdrew support for the bill just hours before the Senate was set to move the proposal to committee review.
At the same time, unconfirmed reports are spreading on Capitol Hill that the planned committee review for tomorrow may be canceled as a result of Coinbase's decision.
Reports are rumors, but they highlight the growing political risk surrounding the bill.
In his statement, Armstrong highlighted four major concerns. The actual ban on tokenized securities means that blockchain-based securities and financial instruments would not be able to move freely within the crypto infrastructure.
According to Coinbase's CEO, the bill expands government access to DeFi transaction data by bringing decentralized protocols under the scope of the Bank Secrecy Act and anti-money laundering regulations.
In particular, the latest changes give the SEC broader authority in crypto markets. This could potentially bring back the issues associated with Gensler's era to the industry.
Finally, he noted that the draft includes provisions for stablecoins and the banking sector that could give banks the ability to restrict competition and reduce crypto-related fees.
What changed in the Senate's rewrite
The Senate Banking Committee will not vote on the House-passed version of the CLARITY Act. Instead, the committee is using a completely rewritten version known as an “amendment in the nature of a substitute”.
The draft significantly alters the way crypto markets in the United States are regulated.
Here is a simple comparison of what was changed.
Coinbase is the largest regulated crypto exchange in the United States and one of the most active influencers in Washington.
Public withdrawal signals to lawmakers that the bill may no longer receive industry support at a critical moment.
It matters because the Senate's banking and agriculture committees need bipartisan support to advance the bill.
What happens next for the CLARITY Act?
The Senate was expected to begin committee review this week. At that time, lawmakers will formally discuss and vote on the changes.
However, after Coinbase's statement, some industry insiders have assessed that leadership may delay or cancel the review to avoid a public loss of support.
So far, the bill has been in constant flux. The battle over who controls cryptocurrencies, stablecoins, and DeFi in the United States has now reached its most fragile stage.