Treasury Secretary Scott Bessent issued a blistering ultimatum to the crypto industry during Thursday’s Senate Banking Committee testimony. His message to firms opposing the stalled CLARITY Act was blunt: accept the regulations or leave the United States.
“There seems to be a nihilist group in the industry who would prefer no regulation over this very good regulation,” Bessent told lawmakers. He added that entities claiming they don’t need the framework “should move to El Salvador.”
The Secretary’s comments mark a sharp escalation in the administration’s push to pass the Digital Asset Clarity Act. The legislation, which cleared the House in 2025, is currently deadlocked in the Senate.
The Target: Coinbase and Yield
Bessent’s “nihilist” label appears squarely aimed at Coinbase (COIN) and other major players who recently withdrew support for the bill. The friction point is Section 404, a provision that bans digital asset service providers from paying yield on stablecoins.
For Coinbase, this is existential. The exchange generates significant revenue from USDC rewards. CEO Brian Armstrong has previously characterized the provision as a tactic to “allow banks to ban their competition” by monopolizing interest-bearing products.
Markets React to Legislative Limbo
The open hostility between the Treasury and the industry’s largest U.S. exchange rattled markets. Investors interpret the standoff as a signal that regulatory clarity is effectively dead for 2026.
Bitcoin (BTC) purged 9% to trade near $66,200, erasing weeks of gains. Coinbase stock fared worse, sliding nearly 7% in after-hours trading to $167.27 as the prospect of a prolonged regulatory winter set in.
“It is impossible to proceed,” Bessent warned the committee, implying that without the CLARITY Act, the Treasury and SEC would revert to enforcement-heavy oversight. The window for passage is closing; with mid-terms approaching, the bill’s failure likely guarantees another two years of legal warfare.
