Coinbase Pulls Support, Delaying U.S. Crypto Market Structure Bill

The U.S. Senate Banking Committee has postponed a planned markup of a major crypto market structure bill following public opposition from Coinbase CEO Brian Armstrong. Coinbase has stepped back from supporting the legislation, triggering a pause in Senate plans to advance the bill. The decision came after a late review raised concerns inside the company about consumer harm and weakened competition.

The Senate Banking Committee Chairman, Tim Scott, announced the delay, indicating that no new date has been set. Negotiations had already been fragile, and Coinbase's withdrawal added pressure to an already divided process.

Coinbase CEO Brian Armstrong explained that the company withdrew its support after discovering provisions in the draft bill that he believes would favor banks at the expense of consumers and crypto companies. Armstrong stated that Coinbase and other crypto firms stayed engaged in negotiations until the final stages. That position changed when lawmakers released a late-night draft of the bill earlier this week.

Why Did This Happen?

Armstrong raised concerns about several key areas in the bill. These included rules that could limit crypto firms while giving banks a regulatory advantage and provisions that may reduce consumer choice in financial products. Sections that risk removing multiple crypto services from the market and a lack of clarity around how innovation would be treated under federal oversight were also of concern.

Coinbase and other crypto firms stayed engaged in negotiations until the final stages. That position changed when lawmakers released a late-night draft of the bill earlier this week. After reviewing the hundreds of pages, Coinbase concluded that several sections could damage users and the broader market.

The Senate Banking Committee delayed the markup of the bill, which was originally scheduled for this week. The committee postponed the vote to allow further negotiations. Chairman Tim Scott stated that discussions with various stakeholders from both the crypto industry and the financial sector are ongoing. He emphasized the importance of a collaborative approach to ensure the legislation is beneficial.

Armstrong warned that passing the bill as drafted could have severe consequences for everyday users. He described the potential outcome as "catastrophic" for American consumers, which led the company and others in the industry to take a public stand.

How Did Markets Respond?

The Senate Banking Committee's decision to delay the discussion underscores the complexity of crafting effective cryptocurrency regulation in the United States. Lawmakers are balancing innovation, consumer protection, and market stability. The effectiveness of this bill will hinge on balancing rigorous regulatory oversight with the needs of the evolving crypto market.

Armstrong stated that Coinbase would rather see no bill passed than accept one that harms users. He pointed out that the draft under review could have eliminated several Coinbase products currently available. He characterized the breakdown in talks as necessary to force lawmakers to reconsider core issues.