Coinbase CEO Brian Armstrong has withdrawn his support for the US Senate crypto market structure bill. He even called the latest draft worse than having no legislation at all. He mentioned that Coinbase could not support the bill after reviewing the Senate Banking Committee draft over the past 48 hours.
Armstrong suggested that the proposal would leave the crypto industry in a weaker position from now on. This comes in when the digital assets market is riding on a bullish wave. The cumulative crypto market cap spiked by 3% in the last 24 hours amid the bill being announced. Bitcoin is moving ahead to reclaim $98,000 while Ethereum looks to smash $3,500.
Coinbase CEO flags privacy risks
In an X post, Coinbase CEO stated that the company would prefer no bill to what he described as a bad bill. He added that the draft contains too many problems to fix through minor changes. He warned that the text would ban tokenized equities. However, it would also restrict DeFi activity and reduce user privacy by giving the government access to financial records.
As per his list, the bill would weaken the role of the Commodity Futures Trading Commission (CFTC). It would expand the authority of the Securities and Exchange Commission. Armstrong criticised draft amendments tied to stablecoins. He said proposals that would limit or eliminate rewards on stablecoins. This move would allow banks to block competition. Such changes would protect incumbents rather than consumers.
He further wrote that “We appreciate the hard work by members of the Senate to reach a bipartisan outcome.” “But this version would be materially worse than the current status quo. We would rather have no bill than a bad bill.”
Coinbase would continue to engage with lawmakers and push for changes to the draft. Meanwhile, he remains positive that a better version could still come out through further negotiations.
Over 137 amendments filed
Massive comments were made to the public after US senators unveiled draft legislation for crypto. Lawmakers expect that the bill would clarify which regulators oversee different parts of the crypto sector if it becomes law.
The crypto industry has been asking for such laws for years after witnessing multiple hacks, scams, Rug pulls, and more. One of the main goals of the bill is to define when a digital token should be treated as a security or a commodity. This definition has been at the core of disputes between crypto firms and regulators.
The proposal would give the CFTC authority to oversee spot crypto markets. That approach has been supported by much of the industry. Many firms view the CFTC as a more principles based regulator than the SEC. Banks have argued that paying rewards on stablecoins could pull deposits out of the insured banking system. They have warned that this could raise financial stability concerns if large amounts of money move into such products.
The draft has reportedly attracted more than 137 proposed amendments till now. Lawmakers expect several changes before any final vote. Meanwhile, Industry groups have accused banks of exerting heavy influence over the process. Blockchain Association CEO Summer Mersinger said progress is being slowed by pressure from large financial institutions.
She said that banks are seeking to rewrite the bill to protect their market position. She added that proposals to eliminate stablecoin rewards are designed to limit consumer choice. This will also block new products before they can compete.
