White House Considers Pulling Crypto Bill Support if Negotiations Fail

The White House is considering withdrawing support for the CLARITY Act, a key crypto market structure bill, following Coinbase's decision to pull its backing. Coinbase cited concerns over the bill's impact on DeFi and stablecoin rewards. The move has sparked frustration among administration officials.

Coinbase CEO Brian Armstrong stated the draft bill would restrict DeFi, ban tokenized equities, and eliminate stablecoin rewards. He emphasized that the company would rather have no bill than a bad one. Armstrong is pushing for a compromise that addresses these issues.

The White House reportedly views Coinbase's decision as a "rug pull" and is demanding a return to negotiations. A source close to the Trump administration said the bill is ultimately President Trump's, not Coinbase's. Without a resolution, the administration may abandon the bill entirely.

Why Did This Happen?

Coinbase's concerns center around the bill's provisions on stablecoin yield and DeFi. Armstrong warned that the bill would weaken the CFTC and shift too much power to the SEC. He also highlighted privacy concerns due to expanded government access to financial records.

Industry players and legal experts have also expressed concerns. The bill's restrictions on stablecoin yields are seen as a move to protect banks from crypto competition. Some fear that these provisions could undermine innovation in the DeFi space.

How Did Markets React?

Crypto companies, including Coinbase, Circle, and Bullish, have seen their shares dip following the news. Bitcoin and altcoins like Ethereum and Solana also experienced a pullback. However, some gains have been recouped as market participants wait for more clarity.

The bill's delay has created uncertainty in the crypto market. Analysts warn that the lack of a clear regulatory framework could push US firms to a disadvantage compared to global competitors.

What Are Analysts Watching Next?

Analysts are closely monitoring whether the White House and Coinbase can reach a compromise. If not, the bill may face further delays or even be abandoned. This could impact the regulatory landscape for digital assets in the US.

The Senate Banking Committee had scheduled a markup for the bill but postponed it after Coinbase's withdrawal. Chairman Tim Scott said all parties remain engaged in good faith negotiations. A new timeline for the markup has not been set.

Market observers are also watching for further developments in the Samourai Wallet case, as well as the administration's broader approach to crypto regulation. The outcome of these issues could shape the future of the industry.