White House Slams Coinbase Exit

Popular journalist Eleanor Terrett reported that the administration may pull its backing entirely unless Coinbase returns with an agreement acceptable to banking interests. The exchange’s sudden exit has triggered fierce backlash from both government officials and industry observers.

White House Fury Over “Rug Pull”

Terrett’s source within the Trump administration revealed the White House is “said to be furious” with Coinbase’s “unilateral” decision. Officials reportedly received no advance notice before the public announcement.

“This is President Trump’s bill at the end of the day, not Brian Armstrong’s,” the source emphasized, underscoring the administration’s view that Coinbase overstepped its role.

The White House specifically characterized the move as a “rug pull” against both the administration and the broader cryptocurrency industry. Officials now expect the exchange to return with a revised proposal that addresses banking concerns while maintaining industry support.

Banks vs. Yields: The Core Conflict

Coinbase CEO Brian Armstrong outlined multiple objections to the current bill draft, with stablecoin yields emerging as the primary flashpoint. The exchange accused banks of pushing amendments that would effectively eliminate rewards on stablecoin holdings.

Armstrong’s list of concerns included:

• A de facto ban on tokenized equities
• DeFi prohibitions granting government unlimited access to financial records
• Erosion of CFTC authority, making it subservient to the SEC
• Draft amendments eliminating stablecoin rewards while allowing banks to ban competition

The banking industry’s influence over the legislation has become increasingly apparent. Sources told News Of Losangeles that financial institutions demanded changes preventing or limiting users from earning yields on stablecoins, a feature that directly competes with traditional banking products.

Industry Divides Over Coinbase’s Gambit

The exchange’s withdrawal has split the cryptocurrency industry. While some players like Ripple’s Brad Garlinghouse maintained neutral positions, others directly challenged Coinbase’s motivations.

Citron Research, which had already criticized Coinbase earlier in the week, intensified its attacks by accusing Armstrong of deliberately undermining the bill. The research firm argued that Coinbase’s objections reveal fear of competition from tokenized securities firms.

This perspective suggests Coinbase seeks regulatory clarity for itself while blocking potential rivals from entering the market. The exchange’s focus on tokenized equities restrictions has drawn particular scrutiny from competitors.

Legislative Limbo

The Senate Banking Committee’s immediate response to the controversy was telling. The committee postponed its scheduled January 15 markup session without announcing a replacement date, effectively freezing the bill’s progress through Congress.

This delay creates significant uncertainty for an industry that has spent years lobbying for regulatory clarity. The Trump administration’s threat to withdraw support entirely compounds the legislative risk.

Banking Influence Exposed

The controversy has illuminated the banking sector’s behind-the-scenes influence on cryptocurrency legislation. Banks appear positioned to benefit from provisions that would restrict stablecoin yields, eliminating a competitive threat to traditional savings products.

Coinbase’s objections center on what it views as banks using regulatory capture to ban competition. The exchange argues that allowing banks to block stablecoin rewards while maintaining their own products creates an uneven playing field.

What’s Next

The ball now sits firmly in Coinbase’s court. The White House expects the exchange to return with a compromise that accommodates banking interests while preserving some industry support. Without Coinbase’s backing, the administration faces the prospect of passing a crypto bill opposed by one of the sector’s largest players.

The administration’s hardline stance reflects the political calculus surrounding the legislation. With President Trump personally invested in the bill’s success, officials cannot afford another public defection from major industry participants.