Coinbase Says it Won’t Back Senate Crypto Bill Ahead of Banking Committee Vote

Behemoth crypto exchange Coinbase won’t be supporting the Senate Banking Committee’s sweeping cryptocy legislation, its CEO said, just hours before the committee is set to vote on the bill.  In a post on X, Coinbase CEO Brian Armstrong said the crypto exchange cannot support the bill as it is written. 

“We appreciate all the hard work by members of the Senate to reach a bipartisan outcome, but this version would be materially worse than the current status quo,” Armstrong said. “We’d rather have no bill than a bad bill. Hopefully we can all get to a better draft.”

The Senate Banking Committee is scheduled to hold a hearing to amend and vote on that bill on Thursday morning.  The bill aims to clarify regulatory jurisdiction between the Commodity Futures Trading Commission and the Securities and Exchange Commission, define when digital assets qualify as securities or commodities, and establish new disclosure requirements.

“Coinbase coming out against the bill is pretty monumental,” a person familiar with discussions told The Block. “I think it could impact the fate of the bill.”  Armstrong said the proposal raises several concerns, particularly around decentralized finance and stablecoin yields.  He warned that portions of the bill could give the government “unlimited access to your financial records” and undermine user privacy. He also criticized proposed amendments that he said would “kill rewards on stablecoins.”

The treatment of stablecoin rewards has become a big sticking point. Banking groups have criticized a stablecoin law known as GENIUS, which passed over the summer. While the law bars issuers from paying direct interest to stablecoin holders, it does not prohibit third-party platforms such as Coinbase from offering rewards.

Banking groups argue that a lack of clear limits could draw deposits away and potentially harm community banks. Meanwhile, some in the crypto industry say the issue had already been debated ahead of passing GENIUS and accuse banks of trying to limit competition. Armstrong also brought up his concern over the SEC’s authority in the bill, calling it the “erosion of the CFTC’s authority, stifling innovation and making it subservient to the SEC.”