In a significant development affecting the cryptocurrency industry, Coinbase has unexpectedly withdrawn its support for a crucial Senate bill aimed at structuring the crypto market, prompting the Senate Banking Committee to delay a key vote. The withdrawal, announced by Coinbase CEO Brian Armstrong, came just before the committee was scheduled to vote, leaving the future of the legislation uncertain and the industry in turmoil.
The primary point of contention revolves around proposed limits on stablecoin yields, which are rewards similar to interest payments on stablecoin holdings. These stablecoins are often pegged to the value of the dollar and were formally legalized in July through the GENIUS Act. Initially, Coinbase appeared amenable to the bill’s latest provisions, but as the banking lobby pushed for more restrictive language, the company felt compelled to withdraw its backing.
In response to Coinbase’s abrupt exit, pro-crypto senators chose to postpone the vote, with no rescheduling date announced. Senator Cynthia Lummis (R-WY), a principal architect of the bill, expressed disappointment at the division within the industry and reiterated her commitment to creating legislation conducive to crypto growth. “Today’s response from some in the industry proves they are just not ready,” she stated.
The fallout from Coinbase’s decision has left many in the crypto sector scrambling to advocate for the bill, fearing that the company’s move has jeopardized its chances for passage. Cody Carbone, CEO of the Digital Chamber, stressed the need for unity, asserting, “Inaction is unacceptable. We cannot afford to walk away from the table at a moment when clarity is within reach.”
Coinbase’s influence in Washington is notable, as it managed to single-handedly stall a vote supported by both the GOP and the White House. However, insiders indicate that this power may have isolated Coinbase from other industry players, with one policy insider suggesting the company is “on an island here.”
The division appears to be deepening, as one of the White House’s top crypto advisors, Patrick Witt, accused pro-crypto Democrats of acting in “bad faith” regarding the legislation. He expressed disappointment over the postponed markup.
In addition to navigating its role in the negotiations, Coinbase has been emphasizing its control over a significant super PAC network, which has raised over $116 million for upcoming midterm elections. However, even the backers of this initiative seem to be diverging from Coinbase’s strategies. Miles Jennings, a top executive at Andreessen Horowitz, articulated the need for the bill’s passage despite its imperfections, countering Armstrong’s statement that “no bill” is preferable to “a bad bill.”
Adding to the uncertainty, Ripple CEO Brad Garlinghouse expressed surprise at Coinbase’s late-stage withdrawal, indicating that other industry participants remain committed to supporting the bill.
As the landscape becomes increasingly fractured, the fate of the market structure bill remains unclear, especially as discussions move to the Senate Agriculture Committee, which oversees parts of the legislation related to the Commodity Futures Trading Commission (CFTC). Some Capitol Hill sources speculate that further delays may be forthcoming while the Senate Banking Committee assesses its next steps.
A crypto policy leader who was skeptical about the bill’s potential for passage even before Coinbase’s retreat remarked, “I still don’t know what the path forward is.” With the coalition required to advance the legislation showing signs of strain, the cryptocurrency community is left to contemplate the implications of this pivotal moment in the ongoing struggle for regulatory clarity.
