White House Considers Withdrawing Support for Crypto Bill Amid Coinbase Standoff

Coinbase, one of the leading cryptocurrency exchanges, has withdrawn its support for the Digital Asset Market Clarity Act (CLARITY Act), according to multiple reports. The firm cited concerns over provisions that could restrict decentralized finance (DeFi) and ban tokenized equities, as well as eliminate stablecoin rewards.

The CLARITY Act aims to establish a regulatory framework for digital assets in the United States. It seeks to clarify the roles of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) in regulating crypto markets. However, Coinbase's CEO Brian Armstrong said the current draft would do more harm than good and described it as 'materially worse than the current status quo'.

White House officials are reportedly frustrated with Coinbase's unilateral withdrawal of support. According to sources close to the Trump administration, the move blindsided officials and has led to discussions about pulling support for the bill entirely. The administration has emphasized the importance of reaching a compromise on stablecoin yield provisions that would satisfy both crypto companies and banking interests.

Why Did This Happen?

The primary reason for Coinbase's decision is the bill's potential impact on the DeFi ecosystem and stablecoins. Armstrong argued that the bill would weaken the CFTC and concentrate more authority in the SEC, an agency known for its aggressive enforcement stance in the crypto space.

Stablecoins, which are cryptocurrencies pegged to fiat currencies, are also a point of contention. The bill prohibits crypto companies from paying interest solely for holding a stablecoin, although it allows rewards for other activities such as staking or transaction participation.

Coinbase is not the only entity concerned. The crypto industry has been divided over the bill, with some companies supporting it as a step toward regulatory clarity, while others, like Coinbase, argue it could stifle innovation and drive businesses out of the U.S.

How Did Markets React?

The uncertainty surrounding the bill has had an immediate effect on the market. Shares of crypto-related companies, including Coinbase, Circle, and Bullish, have dipped in response to the news. Bitcoin and other major cryptocurrencies also experienced a pullback in gains after the bill's markup was delayed.

Despite the short-term volatility, JPMorgan analysts remain optimistic about institutional crypto flows in 2026, suggesting that a clearer regulatory environment could ultimately attract significant investment.

What Are Analysts Watching Next?

Market participants are now closely monitoring whether the White House will maintain its support for the bill and whether Coinbase is willing to return to negotiations. The administration has reportedly indicated it may abandon the legislation unless a compromise is reached.

Another key focus is the broader impact of the bill on the CFTC and SEC. Armstrong criticized the bill for eroding the CFTC's authority and increasing the SEC's influence, which could reshape the regulatory landscape for digital assets.

The Senate Banking Committee was scheduled to markup the bill, but the session has been delayed pending further discussions. Lawmakers are also debating an ethics provision that would restrict senior government officials, including the president, from profiting from crypto.

Outlook for Future Negotiations

The next few weeks will be critical in determining the fate of the CLARITY Act. If Coinbase and the White House reach a compromise, the bill could still move forward with revised provisions. However, if no agreement is reached, the legislation may face significant delays or even be abandoned altogether.

Analysts believe that while the bill in its current form has stalled, the need for a regulatory framework is unlikely to disappear. The ongoing debate highlights the challenges of balancing innovation, consumer protection, and market stability in the rapidly evolving crypto space.