Coinbase Oficially Rejects Senate Crypto Bill: “No Bill Is Better Than a Bad Bill”

Coinbase CEO Brian Armstrong has formally withdrawn support for the Senate’s Digital Asset Market Clarity Act, declaring that the company “can’t support the bill as written” after reviewing the latest draft text over the past 48 hours.

In a late-night post published just hours before a critical Senate Banking Committee markup scheduled for Thursday, January 15, Armstrong delivered a public rejection that may effectively derail the bill in its current form.

“We’d rather have no bill than a bad bill,” Armstrong wrote, signaling that the crypto industry is prepared to accept regulatory uncertainty rather than lock in what it views as harmful rules.

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The Deal Breakers: Why Coinbase Walked Away

Armstrong outlined four specific provisions that Coinbase says make the legislation unacceptable:

1. De Facto Ban on Tokenized Equities

The draft language would effectively prohibit on-chain versions of stocks and other real-world assets, undermining Coinbase’s publicly stated plans to expand into tokenized equities as part of its 2026 “Everything Exchange” strategy.

2. DeFi Privacy Restrictions

According to Armstrong, the bill introduces DeFi compliance requirements that would force decentralized protocols to collect user data, granting the government broad access to financial records and eliminating on-chain privacy protections.

3. Weakened CFTC Authority

Despite being marketed as a win for the Commodity Futures Trading Commission, Armstrong argues the bill actually erodes the CFTC’s role, leaving it subordinate to the SEC and perpetuating regulatory uncertainty through enforcement-first oversight.

4. Stablecoin Rewards Ban

Confirming industry fears raised earlier this week, the draft includes provisions that would bar non-bank platforms from offering yield or rewards on stablecoins, effectively handing banks exclusive control over interest-bearing digital dollars.

Armstrong warned this would allow traditional banks to “ban their competition” rather than compete on innovation.

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Why This Matters

The timing of Coinbase’s rejection is critical. The company had previously warned lawmakers it would reconsider its support if stablecoin rewards were restricted, but this marks the first official, public withdrawal from the bill.

Without Coinbase’s backing, the fragile coalition of crypto firms, policymakers, and advocacy groups pushing for market structure reform appears fractured. Several analysts now believe the legislation is unlikely to advance in its current form, especially with midterm election pressures looming.

The Bigger Picture

The rejection underscores a widening rift between the crypto industry and the traditional banking lobby, which has aggressively pushed for tighter controls on stablecoins and DeFi. It also highlights the stakes of the current debate: whether the U.S. builds a competitive digital asset framework, or risks pushing innovation offshore.

As Armstrong put it plainly:

“This version would be materially worse than the current status quo.”

For now, the fate of the CLARITY Act (and U.S. crypto regulation more broadly) hangs in the balance.