Coinbase CEO Brian Armstrong said the exchange will withdraw its backing of the Senate’s bipartisan crypto market structure proposal, the Digital Asset Market Clarity Act, calling the current draft “materially worse than the status quo.”
Armstrong added that the industry would “rather have no bill than a bad bill,” a sharp reversal that landed just hours before a pivotal committee vote.
The announcement came ahead of a scheduled markup and vote by the Senate Banking Committee on Thursday, January 15, 2026, led by Chair Tim Scott. The timing underscores the depth of industry opposition to a 278-page draft released late Monday night.
Red Lines in the Draft
Armstrong outlined several non-negotiable issues that prompted the reversal. Chief among them are proposed limits on rewards for simply holding stablecoins, measures Coinbase says would effectively eliminate stablecoin yield. Banking groups have pushed for the restrictions, arguing they would curb deposit migration from traditional banks into digital assets.
The exchange also took aim at the bill’s allocation of regulatory authority, arguing it weakens the Commodity Futures Trading Commission while elevating the U.S. Securities and Exchange Commission. After years of what the industry characterizes as regulation-by-enforcement, Coinbase said placing the CFTC in a subordinate role is unacceptable.
Financial surveillance provisions drew separate criticism. Armstrong warned the draft could grant the U.S. Treasury its broadest transaction-monitoring powers since the USA PATRIOT Act, including the ability to freeze transactions without a court order. He also pointed to language he described as prohibitive for decentralized finance and a de facto ban on tokenized equities.
Political and Market Fallout
The withdrawal of Coinbase’s support has immediate legislative implications. Analysts at Bloomberg Intelligencesuggested the loss of industry backing and fraying bipartisan consensus has pushed the odds of passage in the first half of 2026 below 70%. The scale of disagreement is evident in the 137 amendments filed ahead of the committee vote, reflecting a widening rift between banking interests and crypto-native firms.
The stakes for Coinbase are significant. Stablecoin rewards represent a major revenue stream, with projections estimating the exchange generated about $1.3 billion from stablecoin-related income in 2025 alone.
Despite the pushback, Senator Scott has indicated he intends to move forward with the markup, positioning the bill as essential to establishing a clear federal framework for digital asset markets, even as industry leaders signal they are prepared to walk away entirely.
