Coinbase CEO Brian Armstrong pulls support for crypto market-structure bill

Coinbase Global has pulled its support for the current version of the market-structure bill due for markup in the Senate Banking Committee on Thursday.

“There are too many issues,” Coinbase’s Chief Executive Officer Brian Armstrong wrote in a post on X Wednesday, adding that “this version would be materially worse than the current status quo. We’d rather have no bill than a bad bill.”

Coinbase has been at the forefront of the crypto industry’s push for a market-structure bill — one that supporters say would improve the legitimacy of the asset class, while protecting it from a future anti-crypto presidential administration.

Armstrong said the current text of the bill has “too many issues,” such as its apparent ban on tokenised equities and restrictions on decentralized finance. He also cited “erosion of the CFTC’s authority” and amendments that would end rewards on stablecoins that exchanges offer as reasons for pulling his support.

Coinbase’s new stance could potentially delay or even derail the market-structure bill. The crypto industry, including Coinbase, has been a big funder of congressional campaigns in the 2023-2024 election cycle.

The House passed its own market-structure legislation last year, giving most of the responsibility for regulating digital assets to the Commodity Futures Trading Commission rather than the Securities and Exchange Commission. SEC Chairman Paul Atkins has said he believes many, if not most, digital assets should be regulated as commodities rather than securities.

Stablecoin rewards have been a key issue of contention in putting together the Senate Banking Committee’s draft. While a law signed by President Donald Trump placed restrictions on stablecoin issuers on paying users yield on tokens sitting in their accounts, third parties like crypto exchanges have continued to pay it.

Coinbase pays rewards to certain users holding the USDC stablecoin. That setup helps it keep more USDC on its platform, and that in turn helps the firm earn more from its revenue-sharing agreement with USDC issuer Circle Internet Group Inc. But the banking lobby said such rewards could end up draining deposits, especially at community banks.

The latest Senate Banking proposal came after the Senate Agriculture Committee released a bipartisan bill with its version of the legislation. That draft left out key sections on DeFi and anti-money laundering as both parties continued to negotiate details. The Senate Banking Committee is planning to hold a markup on its version of the bill later this month.

“This is an unwelcome development and there’s a lot of factors that would go into this going forward both through the committee and markup this week and ultimately the senate floor,” said Chris Hayes, a partner at Thorn Run Partners, referring to Armstrong’s social-media post. “And with the narrowing of the Senate calendar heading into midterm elections, that adds to the uncertainty.”

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