Coinbase CEO Raises Concerns About US Crypto Legislation

Summary:
Brian Armstrong, the CEO of Coinbase, has voiced his concerns regarding a newly proposed Senate crypto bill. He argues that the bill, in its current state, presents significant issues that could hinder innovation in the cryptocurrency space.

Key Takeaways

Coinbase CEO Brian Armstrong opposes the new Senate crypto bill, citing major flaws.
The bill seeks to clarify the classification of tokens and assign oversight to the CFTC.
Concerns include potential restrictions on tokenized assets and decentralized finance (DeFi) practices.
The crypto community is closely monitoring developments as the bill progresses in Congress.

Coinbase

Coinbase CEO Raises Concerns About US Crypto Legislation

Armstrong Expresses Opposition to the New Bill
Brian Armstrong, CEO of cryptocurrency exchange Coinbase, has stated that the company cannot support the newly proposed Senate crypto bill in its current form. This development adds to the uncertainty surrounding Washington's efforts to create clear regulations for digital assets.

Earlier this week, senators introduced a draft aimed at defining when tokens should be categorized as securities or commodities. The proposed legislation also seeks to give the Commodity Futures Trading Commission (CFTC) oversight of spot crypto markets—a long-standing goal of the industry.

On Wednesday, Armstrong expressed his disapproval after examining the draft, stating, "After reviewing the Senate Banking draft text over the last 48 hours, Coinbase unfortunately can’t support the bill as written."

Image Source: X/@brian_armstrong

Concerns Over Tokenization and DeFi Restrictions

Armstrong highlighted several risks associated with the bill, including what he sees as an implicit ban on tokenized stocks, limitations on decentralized finance (DeFi), and privacy implications. He also warned that the bill could undermine the CFTC, leaving innovation vulnerable to the decisions of the Securities and Exchange Commission (SEC).

Additionally, Armstrong criticized provisions that would restrict rewards associated with stablecoins, which is a contentious issue in the ongoing debate between banks and crypto firms regarding whether high-yield payouts should be treated as deposit products.

"We appreciate all the hard work by members of the Senate to reach a bi-partisan outcome, but this version would be materially worse than the current status quo. We’d rather have no bill than a bad bill. Hopefully, we can all reach a better draft," he stated.

Under the proposed bill, crypto companies would be prohibited from offering interest to consumers just for holding stablecoins. However, rewards would still be allowed for specific activities, such as making payments or participating in loyalty programs, with the SEC and CFTC responsible for setting regulatory disclosures.

Crypto Industry Keeps a Close Eye on Legislative Developments

Coinbase’s position is significant because the company has been a leading voice in discussions about market structure and has invested heavily in pro-crypto political campaigns. As lawmakers prepare for a Senate Banking Committee markup scheduled for 10 am ET Thursday, the absence of a major industry backer raises concerns.

In related commentary, Galaxy asserted that the Senate Banking draft exceeds the reach of the House-passed Digital Asset Market Clarity Act regarding illicit finance. They cautioned it could extend the Treasury Department's authority over crypto transactions through a new special measures provision.

Galaxy likened this authority to the powers established under the Patriot Act after the September 11 attacks. It argued that the Treasury could broadly enforce these measures across international transactions if it designates certain jurisdictions, institutions, or transaction types as significant money laundering risks.

The push for a Senate framework comes amid a shift towards a more supportive stance by the Trump administration regarding the crypto industry. Lawmakers are working to replace existing enforcement uncertainty with clear regulations on oversight, disclosures, and market conduct.

For the cryptocurrency market, the coming days will be crucial. They will determine whether lawmakers will modify the draft to keep major platforms engaged or if the bill will stall again, forcing the industry to continue operating in an environment of inconsistent agency guidance and legal disputes.