Coinbase Torpedoes CLARITY Act; Armstrong Threatens Senate Scorecard
Coinbase CEO Brian Armstrong withdraws support for the CLARITY Act over stablecoin yield bans, creating a standoff with Senate Banking leadership just days before the vote.
Armstrong Nukes The Deal 48 Hours Before Markup
Coinbase CEO Brian Armstrong has unilaterally withdrawn support for the Digital Asset Market Clarity Act (CLARITY Act), detonating a fragile bipartisan consensus just two days before the Senate Banking Committee’s scheduled markup. In a public statement issued Tuesday, Armstrong labeled the current draft “materially worse than the current status quo,” signaling that the industry’s largest U.S. player is prepared to walk away from federal legislation entirely rather than accept the proposed compromise.
The market reaction was immediate but contained. Coinbase (COIN) slipped 2% in pre-market trading, reflecting investor anxiety over renewed regulatory deadlock.
We’d rather have no bill than a bad bill.
The Dealbreaker: Stablecoin Yields
The rupture centers on a single, high-stakes revenue stream: stablecoin rewards. The current draft reportedly restricts or bans yield payments on stablecoins like USDC, a provision heavily lobbied for by the banking sector. Banks argue that interest-bearing stablecoins would siphon deposits from the traditional banking system. For Coinbase, which generates roughly $1.3 billion annually from stablecoin-related revenue, this is an existential red line.
Armstrong explicitly framed this as a battle between consumer interest and banking incumbents, stating that senators must now choose between “bank profits at the expense of the American people, and consumer rewards.”
The Industry Fractures
This reversal creates a rare public split between the industry’s private sector leadership and its newly appointed regulators. Only yesterday, SEC Chair Paul Atkins told reporters he was “bullish” the bill would reach President Trump’s desk in 2026, viewing it as the vehicle to end the SEC’s “regulation by enforcement” era. Armstrong’s veto effectively kills that momentum, betting that the industry has enough political capital to force a rewrite.
Weaponizing the “Crypto Voter”
Armstrong is not just walking away; he is returning fire. He announced that Stand with Crypto, the Coinbase-backed advocacy group with 675,000 members, will “score” the Senate Banking Committee’s vote on Thursday. This converts a complex policy markup into a binary loyalty test for lawmakers facing re-election, threatening to downgrade the “crypto grade” of any Senator who votes for the bill in its current form.
Next Steps
Senate Banking Committee Chairman Tim Scott is now backed into a corner ahead of Thursday’s session. Without Coinbase’s endorsement, the bill loses its claim to being “industry-supported,” emboldening Democratic skeptics like Senator Elizabeth Warren. Meanwhile, the Senate Agriculture Committee has delayed its own markup of the bill until late January, buying time for frantic back-channel negotiations.
