Coinbase Denies White House Clash, Negotiations on CLARITY Act Continue

Coinbase CEO Brian Armstrong has denied rumors of a conflict between the White House and his company regarding the CLARITY Act, a proposed crypto market structure bill. The rumors, which emerged over the weekend, claimed the administration was 'furious' with Coinbase and considering withdrawing support for the bill if an agreement on yield rules is not reached.

Armstrong stated the White House has been 'super constructive' and asked Coinbase to work with banks to find a solution. He emphasized that the company is currently engaged in those discussions.

The CLARITY Act, which aims to establish a regulatory framework for crypto markets, has been a key legislative initiative for the Trump administration.

The White House, however, reportedly signaled it may walk away from the bill if Coinbase does not return to negotiations with a yield agreement acceptable to banks. The administration has expressed frustration over Coinbase's 'unilateral' decision to withdraw support for the bill, calling it a 'rug pull' on the industry.

Why Did This Happen?

Coinbase withdrew its support for the CLARITY Act on Wednesday, citing concerns that the draft legislation would restrict innovation in the DeFi sector and limit tokenized stock trading. The company also raised concerns about privacy protections and the shift of regulatory authority from the CFTC to the SEC.

According to a source close to the Trump administration, the White House views the bill as a national policy effort and not a single-company campaign. Officials reportedly felt blindsided by Coinbase's decision to walk away from negotiations, which they described as a setback for the broader legislative initiative.

How Did Markets React?

The delay in the CLARITY Act's markup has created uncertainty in the crypto market. The bill's future depends heavily on whether Coinbase and the White House can reach an agreement on yield rules for stablecoins. Banking groups have warned that allowing crypto platforms to offer interest on stablecoin balances could siphon deposits away from traditional banks, creating financial stability risks.

Coinbase's stablecoin-related revenue is a key factor in the dispute. S&P Global projected that Coinbase's stablecoin revenue would reach over $1 billion in 2025, much of it tied to its partnership with Circle on USDC. Restrictions on stablecoin yields could significantly impact Coinbase's revenue stream.

What Are Analysts Watching Next?

The Senate Banking Committee has postponed the CLARITY Act markup until lawmakers and industry stakeholders can negotiate more acceptable terms. Armstrong expects a new markup within a 'few weeks,' but delays are possible as the bill's timeline remains uncertain.

Senator Mark Warner has expressed optimism that a compromise can be reached. Meanwhile, Galaxy Digital CEO Mike Novogratz predicted the bill could pass within two weeks if negotiations continue at the current pace according to Intellectia.

The crypto industry remains divided on the issue. Some supporters of Coinbase believe the company is standing up to bank lobbying efforts, while others worry the conflict will delay progress on crucial crypto regulations. As the debate continues, investors are watching closely for any developments that could affect the regulatory landscape and market stability.