The U.S. Senate Banking Committee has indefinitely postponed its vote on the Digital Asset Market Clarity Act (Clarity Act) after Coinbase withdrew support late Wednesday. The reversal, stating the company would “rather have no bill than a bad bill”, shattered the industry’s unified lobbying front and sent COIN shares sliding as the market repriced the likelihood of regulatory gridlock.
The Dealbreaker: ‘De Facto Bans’ and Yield
CEO Brian Armstrong’s rejection of the draft legislation centers on three existential threats to Coinbase’s roadmap. First, the bill’s language on tokenized assets would create what Armstrong calls a “de facto ban on tokenized equities,” effectively neutralizing Coinbase’s plans to compete with traditional brokerages in 2026.
Second, and more immediate to the bottom line, is the prohibition on stablecoin rewards. Bank lobbyists have successfully argued that yield-bearing stablecoins function as uninsured deposits. For Coinbase, which relies heavily on USDC rewards revenue, this provision is a non-starter. Armstrong characterized it as an attempt by banks to “ban their competition” rather than innovate.
Institutional Split
The withdrawal isolates Coinbase from other heavyweights. Ripple and Kraken had signaled readiness to support the compromise, viewing the Clarity Act’s division of CFTC and SEC oversight as a net positive. Securitize CEO Carlos Domingo publicly countered Armstrong, arguing the bill merely clarifies that tokenized equities must follow securities laws. A standard most institutional players already accept.
By pulling the plug hours before the markup, Coinbase has bet that the status quo, however murky, is preferable to a statutory ceiling on its business model.
Market Reaction
The sudden legislative collapse cooled the “January Rally.” Bitcoin and major altcoins gave back weekly gains as traders realized the window for comprehensive market structure reform has likely closed for this Congress. COIN struggled to find a floor, reflecting investor anxiety that the exchange has traded near-term clarity for a longer, riskier political war.
