Coinbase withdraws its support for the Digital Asset Market Clarity Act, stating that the draft bill could ultimately harm the cryptocurrency market instead of benefiting it.
According to Coinbase CEO Brian Armstrong, the draft bill contains multiple flaws and could create more problems than it resolves. In a post on X on Wednesday, Armstrong stated that the company had reviewed the draft released by the Senate Banking Committee and could not support the bill in its current form.
Armstrong wrote, “This is an inferior bill to what we have now.” He added that the company would prefer no bill at all to an inferior bill. He expressed hope that lawmakers can work towards an improved bill.
Coinbase CEO Slams US Crypto Bill
Armstrong outlined several issues he believes could harm the industry. Among the most serious of these is what he considers to be a virtual prohibition of tokenized stocks and very restrictive policies for decentralized finance platforms. The proposal may also grant the government wide access to financial information.
Another critical factor, as identified by Armstrong, is the movement of power away from the Commodity Futures Trading Commission and towards the United States Securities and Exchange Commission. The reason why this factor could impede innovation is that the SEC historically favors taking action through lawsuits rather than through clear guidelines.
The CEO of Coinbase also added that this bill may remove incentives associated with stablecoins and that it favors traditional banks. Banking associations had previously expressed that stablecoins with yields of 5% could cause people to withdraw their money from bank accounts with lower interest rates.
Coinbase Says Bank Influence Shapes Crypto Policy
However, the reaction from the cryptocurrency market is mixed.ETF Analyst James Seyffart said he is disappointed by the development, adding that a market structure law is what is most needed in the industry at this point.
“This is not what anyone wanted to hear,” said Seyffart, but he also stressed the need for regulation in the long term.
Coinbase’s top policy official, Faryar Shirzad, told CNBC: “The banking industry does have a lot of pull in Washington, D.C., to make sure Congress does what’s in their interest.” The overall aim of Coinbase is to help consumers by making it easier to use stablecoins.
“We want to make it as easy as possible for our users,” Shirzad added.
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US Crypto Bill Nears Key Hearing
Despite this pullback of support, Armstrong still thinks Congress can work to correct this legislation. He is not alone among crypto leaders.
Ripple CEO Brad Garlinghouse stated that he still believes that the problems can be solved during the amendment process. He found the bill to be an important milestone in having clear regulations that protect users and promote innovation.
“It would be a positive for crypto if this bill passes,” Garlinghouse told CNBC.
The Senate Committee on Agriculture, Nutrition, and Forestry will conduct its markup hearing on January 27. This will happen only a few days after the text of the bill is released. However, SEC Chairman Paul Atkins recently expressed his optimism that the bill will be signed into law by President Trump this year.
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