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Coinbase’s break with Senate negotiators landed just as lawmakers prepared to move the Crypto CLARITY Act forward. Within hours of the exchange’s public withdrawal, the Senate Banking Committee postponed its markup. The pause signals a deeper problem. The bill meant to settle crypto’s rules of the road now risks stalling under competing demands from banks, regulators, and the industry it aims to govern.
Coinbase said it could not support the Senate Banking draft after reviewing the text. CEO Brian Armstrong argued the proposal would do more harm than good. He cited a de facto ban on tokenized equities, restrictions on decentralized finance, and provisions that would give the government broad access to financial records. He also warned the draft weakens the Commodity Futures Trading Commission while expanding the Securities and Exchange Commission’s reach.
After reviewing the Senate Banking draft text over the last 48hrs, Coinbase unfortunately can’t support the bill as written.
There are too many issues, including:
– A defacto ban on tokenized equities
– DeFi prohibitions, giving the government unlimited access to your financial…— Brian Armstrong (@brian_armstrong) January 14, 2026
Armstrong also flagged changes that would end stablecoin rewards on exchanges. Coinbase earned $247 million in stablecoin revenue in Q4 2024 and $154.8 million from blockchain rewards. Those numbers explain the stakes. Removing exchange-level rewards cuts a meaningful revenue line and reshapes how users hold dollars on crypto platforms.
Banking groups have pressed lawmakers to curb third-party stablecoin rewards. Treasury estimates from April 2024 warned that wide stablecoin adoption could pull up to $6.6 trillion from bank deposits. That concern sits behind draft language that limits activity-based payments tied to stablecoins. Exchanges counter that these payments are not interest from issuers and that bans protect incumbents rather than consumers.
Coinbase’s chief policy officer told CNBC this week that bank lobbying has shaped the text. The claim tracks months of public debate over deposit flight risk and competition between banks and exchanges.
The Senate Banking Committee postponed its hearing after Senator Cynthia Lummis said she expected a delay. Chair Tim Scott confirmed the pause, citing continued talks across parties and sectors.
I’ve spoken with leaders across the crypto industry, the financial sector, and my Democratic and Republican colleagues, and everyone remains at the table working in good faith.
As we take a brief pause before moving to a markup, this market structure bill reflects months of…
— Senator Tim Scott (@SenatorTimScott) January 15, 2026
The Agriculture Committee had already moved its own markup to January 27, 2026. Both committees must advance the bill because they oversee the Securities and Exchange Commission and the Commodity Futures Trading Commission. The House passed its version of the CLARITY Act in July 2024. The Senate now faces pressure to reconcile jurisdiction and market impact.
Industry reaction remains split,as some firms and trade groups back the Senate approach, arguing it brings clarity, whereas others share Coinbase’s concerns and want revisions before any vote.
The pause buys time, but it also shows how thin the consensus around crypto market structure remains. The debate is no longer about whether rules are needed, but whose interests those rules protect. Exchanges warn the draft favors banks and constrains tokenization and DeFi. Bank advocates frame the same limits as necessary guardrails.
That split now shapes the CLARITY Act’s path. The delay does not end the bill, but it raises a test for lawmakers: whether they can write rules that manage risk without freezing competition. The outcome will determine whether crypto regulation moves forward this year or returns to negotiation.
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