Tokenization Firms Say Coinbase Is Wrong on Crypto Bill Hindering Tokenized Equities

The U.S. Senate Banking Committee postponed its markup of the crypto market structure bill shortly after Coinbase CEO Brian Armstrong condemned the proposed legislation. The delay came as bipartisan negotiations continue, with no new date set for the vote. Coinbase cited multiple issues, including what it described as a de facto ban on tokenized equities.

The bill aims to define when digital assets are securities or commodities and assign oversight to the SEC or CFTC. However, industry leaders, including Coinbase's chief policy officer, raised concerns that it could block the SEC from allowing tokenization of equity markets.

Market reactions to the delay were mixed. Bitcoin and Ethereum dipped in value following the news, with Bitcoin slipping 1% in 24 hours to $96.2K and Ethereum falling 0.3% to $3.34K according to market data.

Why Did This Happen?

Coinbase CEO Brian Armstrong stated that the bill contains flaws that would "kill stablecoin rewards" and erode the CFTC's authority. He also criticized the approach to DeFi and tokenized equity rules.

The bill's potential impact on tokenized equities has drawn sharp criticism from firms like Coinbase, which sees tokenized stocks as a way to enable 24/7 trading, fractional ownership, and real-time settlement.

How Did Markets React?

The postponement led to a market pullback for cryptocurrencies. Bitcoin fell below $96,000, and the drop risked breaking the four-day rally it had previously seen.

Institutional participation in tokenized equities, however, is growing. Bitget, the largest Universal Exchange (UEX), captured 89% of the tokenized stock market in December 2025, up from 73% in early December.

What Are Analysts Watching Next?

Analysts remain split on the bill's implications. Bernstein analysts maintained an Outperform rating for Coinbase, expecting a tokenization supercycle in 2026, while Rosenblatt reduced its price target.

Senator Elizabeth Warren also voiced concerns about the inclusion of crypto in retirement plans. She warned that allowing crypto in 401(k) accounts could expose workers to excessive risk given its volatility and lack of transparency.

Meanwhile, the Senate Agriculture Committee announced it will hold its markup hearing on January 27, focusing on the regulatory role of the CFTC and broader oversight.

Coinbase's chief policy officer reiterated concerns that the bill could undermine innovation in tokenized equities and prevent the SEC from regulating new financial products on the blockchain.

The debate over the bill highlights the tension between regulatory clarity and innovation in the crypto space. With both industry and lawmakers working to finalize a framework, the final shape of the legislation remains uncertain.