Senate Crypto Bill Stalls: White House Warns Industry as Coinbase Walks
Senate Banking Committee postpones crypto bill markup after Coinbase withdraws support over stablecoin yield restrictions, drawing sharp rebukes from White House advisors.
The Deal Breaker
The Senate Banking Committee has indefinitely postponed the markup of the Digital Asset Market Clarity Act (CLARITY Act), signaling a collapse in the fragile truce between banking lobbyists and the crypto industry. The breakdown comes days after Coinbase withdrew support for the legislation, citing restrictive provisions on stablecoin yields that CEO Brian Armstrong labeled a “bad bill.”
Markets reacted swiftly to the uncertainty. Coinbase (COIN) shares slipped 4.4% to trade near $227, while DeFi blue-chips like Uniswap (UNI) dropped 3.6% to $4.82 and Maker (MKR) fell 2.6% to $1,473, reflecting fears that regulatory clarity is slipping out of reach.
White House: “You Will Have Achieved Nothing”
The Trump Administration is scrambling to salvage the bill before the January 30 government funding deadline. Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, issued a blunt warning to industry holdouts on X:
“For the anti-rewards/yield crowd currently threatening to withhold their support for the CLARITY Act, I would remind you that tanking the bill over this issue preserves the status quo which you allege is intolerable. You will have achieved nothing.”
Witt further cautioned that rejecting a Republican-led compromise now could lead to a “future Dem version” that the industry would “hate even more,” effectively telling crypto leaders to choose imperfect regulation over a regulatory void.
The Yield War: Banks vs. Innovation
The conflict centers on a single revenue stream: stablecoin yields. The American Bankers Association (ABA) has lobbied aggressively to ban crypto platforms from paying interest on idle stablecoin balances, arguing it creates an unfair advantage that could drain deposits from community banks.
Senator Angela Alsobrooks (D-Md.) attempted to broker a late-stage compromise, proposing language that would allow yield payments only on transactional activity (e.g., payments or staking) but not on passive holdings. While intended to appease banks, the text was too restrictive for major exchanges. Coinbase and others argue that banning passive yield kills a core utility of digital dollars, rendering them inferior to traditional money market funds.
The Clock is Ticking
White House Crypto Czar David Sacks has urged stakeholders to use the pause to “close remaining gaps,” but time is short. If the CLARITY Act is not attached to the January 30 spending bill, it risks being shelved until after the 2026 midterms, leaving the industry under the enforcement-heavy regime it has fought to dismantle.
