The Deal Breaker
The Trump administration is reportedly prepared to abandon the Digital Asset Market Clarity Act (CLARITY Act) after Coinbase unilaterally withdrew its support, a move an administration official characterized as a “rug pull against the White House and the rest of the industry.” The collapse in negotiations forced the Senate Banking Committee to cancel its scheduled markup of the bill, leaving the most comprehensive U.S. crypto market structure legislation in limbo.
Fox Business reporter Eleanor Terrett broke the news, citing sources close to the administration who claim officials are “furious” with Coinbase CEO Brian Armstrong. The White House views the legislation as a key component of President Trump’s economic agenda, with one source emphasizing, “This is President Trump’s bill at the end of the day, not Brian Armstrong’s.”
The Yield War: Banks vs. Stablecoins
The conflict centers on a single, high-stakes provision: stablecoin yield. The current draft of the CLARITY Act effectively bans platforms from passing yield to customers, a concession demanded by the banking lobby. The arithmetic is existential for community banks. Stablecoins like USDC can offer 3-4% yields derived from underlying Treasuries, while traditional bank deposits average near 0.14%. Banks fear this spread could trigger up to $6.6 trillion in deposit flight.
We’d rather have no bill than a bad bill. Hopefully we can all get to a better draft. Brian Armstrong, Coinbase CEO
Armstrong argues the ban favors banking incumbents at the expense of consumers. In a public rebuttal, he criticized the draft for “killing rewards on stablecoins,” prohibiting DeFi protocols, and banning tokenized equities. While Armstrong describes ongoing talks as “super constructive,” the cancellation of the Senate markup suggests a breakdown in the legislative process.
Market Reaction
Markets reacted swiftly to the legislative paralysis. Coinbase (COIN) shares traded around $241.15, struggling to find momentum as regulatory uncertainty deepened. Bitcoin, which had been rallying, hit resistance near $95,000 as the bill’s prospects dimmed. The delay is a blow to institutional players waiting for the CLARITY Act to define the jurisdiction split between the SEC and CFTC.
The White House has issued an ultimatum: Coinbase must return to the negotiating table and compromise on yield, or the administration will withdraw support entirely. Without executive backing, the bill is effectively dead.
