Coinbase Might Withdraw Support for Key Market Structure Bill Impacting Stablecoin Transactions

Coinbase has indicated it may withdraw its support for a key market structure bill that seeks to redefine the regulatory landscape for stablecoins in the US. The firm's potential move comes as part of a broader debate over whether the bill's current provisions, including restrictions on interest payments and yield structures, could weaken the competitiveness of US dollar-backed stablecoins according to reports.

Industry experts have noted that the legislation, known as the CLARITY Act, has faced challenges in securing enough Senate votes to pass. The bill aims to clarify whether tokens are to be classified as securities under SEC jurisdiction or treated as commodities under CFTC oversight as the legislation seeks to clarify. The lack of consensus among lawmakers has delayed progress, with some fearing the bill could entrench banking interests and weaken consumer protections.

Regulatory uncertainty has been a recurring issue for the crypto sector. Coinbase CEO Brian Armstrong recently criticized U.S. policies, suggesting that restrictions on yield for stablecoin balances put the US at a disadvantage compared to China's Digital Yuan, which now pays interest on balances according to Armstrong. Armstrong's comments highlight concerns that U.S. stablecoin innovators might lose market share to countries offering more competitive structures as reported.

Why Did This Happen?

Coinbase and other crypto firms have long advocated for a regulatory framework that allows for yield generation on stablecoin balances. According to Armstrong, such features benefit ordinary users and could foster innovation in lending and financial inclusion. However, the bill's prohibition on interest payments has been supported by community banks and certain lawmakers, who fear that stablecoin yields could siphon deposits from local financial institutions as the bill's provisions.

The current debate is further complicated by the recent adoption of the GENIUS Act in July 2025, which created a federal framework for dollar-backed stablecoins but included a clause banning interest or yield payments as the act created. This act was intended to ensure stablecoin stability, but critics argue it has instead stifled innovation and created an uneven playing field.