At a Glance
- Coinbase withdrew support for the Senate’s CLARITY Act on January 14
- CEO Brian Armstrong cited four objections, including a potential ban on stablecoin rewards
- Citron Research claims the move is meant to block competition from tokenized securities firm Securitize
- Senate Banking Committee postponed its markup on January 15 with no new date set
Why it matters: The dispute could determine whether the U.S. gets its first comprehensive crypto market structure law or if negotiations collapse entirely.
Coinbase’s public break with the Senate’s CLARITY Act has ignited a firestorm inside the crypto industry, pitting the exchange against rivals and lawmakers who still want the bill to move forward.
Coinbase Drops Support
On January 14, Coinbase formally pulled its backing from the crypto market structure bill. Armstrong published a four-point list of objections:
- A de facto ban on tokenized equities
- Expanded government access to DeFi user data
- A power shift from the CFTC to the SEC
- Draft language that could end stablecoin rewards
Armstrong said Coinbase would “rather have no bill than a bad bill,” but added he was optimistic that changes were still possible.
Citron’s Accusation
Citron Research fired back the next day, posting on X that Armstrong’s CNBC interview showed fear of competition. The research firm argued that Coinbase wants regulatory clarity without opening the door to rivals, specifically tokenized securities firm Securitize, which already holds the required licenses.
Citron claimed Coinbase is pushing back because a “cleaner version” of the bill could favor Securitize more than Coinbase.
Industry Split
Not everyone sided with Citron. Crypto YouTuber George Tung, known as CryptosRUs, defended Armstrong, saying banks are resisting stablecoins because of competition. Tung pointed to the gap between average U.S. savings account yields and stablecoin yields backed by short-term Treasuries, arguing that clear rules should let both banks and crypto firms compete.
Ripple CEO Brad Garlinghouse struck a more measured tone during remarks at a CfC St. Moritz panel. He said Coinbase had raised “fair concerns” but admitted surprise at how strongly Armstrong opposed the bill. Garlinghouse added that most of the industry was still leaning in and trying to work through the issues.
Committee Postpones Vote
The dispute played out as the Senate Banking Committee postponed its scheduled markup of the crypto market structure bill on January 15. Committee chair Tim Scott said discussions were continuing across party lines and with industry, but no new date was set.
According to journalist Eleanor Terrett, tempers remain high behind the scenes. Some lawmakers, staffers, and industry players are still angry about how the Banking Committee markup collapsed. However, she noted a belief among stakeholders that the bill could recover if a deal on stablecoin yield is reached between banks, Coinbase, and Democrats in the coming days.
Section 505 Debate
Terrett added that the tokenized securities provision, known as Section 505, may be less contentious than first thought. Some tokenization firms now say the language was taken out of context, while Armstrong and others are hopeful it could be changed or removed entirely. The outcome of these adjustments could determine whether the CLARITY Act progresses or stagnates.
Key Takeaways
- Coinbase’s opposition centers on four specific provisions, with stablecoin rewards being the most contentious
- Citron Research claims the move is anti-competitive, while some industry voices see it as protecting innovation
- The Senate Banking Committee has postponed its markup indefinitely
- Section 505 on tokenized securities could be revised to win back support
- A potential deal on stablecoin yields between banks, Coinbase, and Democrats may revive the bill
