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Coinbase has formally withdrawn its support for the Digital Asset Market Clarity Act (H.R. 3633), a market structure legislation currently under review in the U.S. Senate.
The announcement came from CEO Brian Armstrong just hours before the Senate Banking Committee was scheduled to mark up the bill. Armstrong cited concerns that the current draft would leave the industry in a position “materially worse than the current status quo”.
Reasons For Withdrawal
In a statement released on social media, Armstrong highlighted three primary provisions in the Senate draft that prompted the reversal:
- Tokenized Equities: Armstrong warned that the bill contains language that would effectively act as a “de facto ban” on tokenized equities.
- DeFi Restrictions: The draft reportedly extends Bank Secrecy Act (BSA) obligations deep into the decentralized finance (DeFi) stack, which could impact software developers and non-custodial entities.
- Stablecoin Rewards: A major point of contention involves “preserving rewards for stablecoin holders.” The banking lobby has reportedly pushed to restrict non-banks from offering yield on stablecoins, a revenue stream that generated substantial income for Coinbase in previous quarters.
Legislative Impact
The Digital Asset Market Clarity Act aims to establish a legal framework for digital assets by dividing regulatory oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). (Read more: GENIUS vs. CLARITY: How Two Crypto Laws Aim to Regulate Digital Assets)
However, financial policy analysts suggest Coinbase’s exit could stall the bill’s progress. Jaret Seiberg of TD Cowen noted that the move is often a signal that a bill is “no longer fixable through negotiation.”
“We see this as potentially derailing market structure legislation in this Congress,” Seiberg wrote in a note to clients, adding that a delay would generally be “negative for crypto and positive for banks”.
Recent Product Expansion and News
The regulatory standoff follows a period of aggressive product expansion for the exchange. In December, Coinbase announced a series of strategic initiatives, including the launch of its own prediction markets and further opening its Base layer-2 network to the public.
In the Philippines, access to the Coinbase website is blocked by Internet service providers upon order of the National Telecommunications Commission. (Read More: Coinbase, More Crypto Platforms Blocked in PH Amid NTC Crackdown on Unlicensed VASPs)
Committee Markup
The Senate Banking Committee is set to mark up the bill on Thursday morning. The session will involve debates on over 137 filed amendments, covering issues ranging from presidential ethics to stablecoin yield provisions.
Despite the scheduled markup, sources tracking the negotiations indicated that the committee may lack the necessary votes to advance the bill, regardless of Coinbase’s position.
This article is published on BitPinas: Coinbase Withdraws Support for US Market Structure Bill
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