In a development that has shaken the cryptocurrency industry, Coinbase, the largest regulated crypto exchange in the United States, has announced the withdrawal of its support for the digital asset market structure bill. This strategic decision, coming on the eve of the Senate Banking Committee’s examination of the text, marks a turning point in the relationship between the crypto industry and American legislators.
A Radical Position: « No Bill Rather Than a Bad Bill »
Brian Armstrong, CEO of Coinbase, justified this decision by publicly stating: « We prefer to have no bill rather than a bad bill ». This declaration resonates as a severe warning to legislators about the dangers of a poorly designed regulatory framework for the American crypto ecosystem.
Major Points of Friction
1. The Ban on Tokenized Securities
One of Coinbase’s main concerns involves what Armstrong calls a « de facto ban on tokenized securities. » This provision directly threatens the ambitions to develop tokenized asset markets, a strategic segment for the future of decentralized finance.
Tokenized securities represent a major opportunity for modernizing traditional financial markets. Their potential prohibition would constitute a significant setback for American innovation in this crucial domain.
2. Restrictions on DeFi and Privacy
The provisions relating to decentralized finance (DeFi) have been identified as particularly problematic. Armstrong warned against measures that would give « the government unlimited access to users’ financial records and eliminate their right to privacy. »
This criticism raises fundamental questions about the balance between regulation and protection of individual freedoms in the crypto space.
3. The Stablecoin War
The stablecoin issue represents a crucial economic stake. Coinbase shares the interest revenues generated by USDC reserves and offers rewards of approximately 3.5% to Coinbase One customers. Stablecoin-related revenues are expected to reach $1.3 billion in 2025, making this a central issue.
Banking groups are lobbying to ban interest-bearing stablecoins, arguing that they could cause a « deposit flight » from low-interest bank accounts. Coinbase counters that such a ban would stifle innovation and push users toward offshore platforms.
4. Rebalancing of Regulatory Powers
Armstrong also criticized provisions that would weaken the authority of the Commodity Futures Trading Commission (CFTC) while expanding that of the Securities and Exchange Commission (SEC). This redistribution of powers between regulators is perceived as a threat to the institutional balance necessary for healthy crypto market development.
Immediate Consequences on the Legislative Process
Coinbase’s decision had immediate repercussions. The Senate Banking Committee postponed the scheduled hearing to examine the bill. Capitol sources even mention the possibility that the examination could be completely removed from the agenda.
Coinbase’s withdrawal of support, as a major and regulated player in the American market, sends a powerful signal to legislators. The platform is one of the most active voices of the crypto industry in Washington, and its public opposition could jeopardize the bipartisan support necessary for the project’s advancement.
Industry Support
Coinbase’s position has received support from influential industry figures. Michael Saylor, Executive Chairman of Strategy, expressed his support for this decision, suggesting growing solidarity within the industry against what is perceived as excessive regulation.
Future Prospects
Despite his firm opposition, Brian Armstrong remains optimistic about the possibility of reaching an improved version of the bill: « I’m actually quite optimistic that we’ll arrive at the right outcome with continued efforts ».
This position suggests that Coinbase remains open to dialogue and negotiation, while maintaining a firm line on non-negotiable principles.
Implications for the Future of Crypto Regulation
Coinbase’s withdrawal of support represents much more than simple corporate disapproval. It is a pivotal moment in the struggle to define the regulatory framework for the future of digital assets in the United States.
The outcome of this standoff will have lasting implications not only for Coinbase and its competitors, but for the overall competitiveness of the United States in the crypto ecosystem. While other jurisdictions are advancing with clearer regulatory frameworks favorable to innovation, American uncertainty could cost dearly to its technological leadership.
The message is clear: the American crypto industry prefers the absence of regulation to poorly designed regulation that would threaten innovation, privacy, and the future of decentralized finance. The challenge for legislators will now be to find a balance that protects consumers without stifling the innovation that could define the next generation of financial services.
