Coinbase Pulls Support From US Crypto Bill Over Concerns It Could Harm Consumers And Limit Competition

Coinbase Pulls Back From US Crypto Bill Over Consumer And Competition Concerns

Coinbase CEO Brian Armstrong has publicly withdrawn his company’s support for a major U.S. crypto market structure bill, citing provisions that could harm consumers and restrict competition.

In a post on X and an interview with CNBC, Armstrong said the decision came after a late-night draft review revealed unexpected elements that industry participants had not anticipated.

He added that advancing the legislation in its current form would not have been prudent.

Senate Markup Postponed After Coinbase Opposition

The withdrawal directly impacted the bill’s progress, prompting the U.S. Senate Banking Committee to postpone a planned markup session with no new date set.

Committee Chairman Tim Scott confirmed the delay, emphasising that discussions with lawmakers and industry representatives are ongoing.

The legislation aims to clarify federal oversight of the U.S. crypto sector, including when digital assets should be classified as securities or commodities, and assigning policing of spot markets to the Commodity Futures Trading Commission (CFTC).

What Concerns Did Coinbase Raise

Armstrong highlighted several contentious points in the bill, including provisions he said would favour incumbent banks over emerging crypto firms, potentially limiting consumer choice and innovation.

He warned that some clauses could effectively eliminate multiple existing Coinbase products.

Armstrong explained,

“The high level principle is that you can't really have banks come in and try and kill their competition at the expense of the American consumer.”

Stablecoins were a key area of dispute.

Armstrong argued that consumers currently earn higher returns from stablecoin-based products than from traditional savings accounts, which pay an average of just 14 basis points.

By comparison, stablecoin rewards can offer roughly 3.8%.

He stressed that these assets are fully backed one-to-one with reserves, typically held in short-term U.S. Treasurys under proposed frameworks, and that crypto firms do not engage in fractional reserve banking.

A Strategic Pause To Encourage Revisions

Armstrong said the company’s opposition is intended to prompt lawmakers to revisit the legislation rather than halt it completely.

He expressed optimism that a revised draft could return to the Senate markup process within weeks, describing the current setback as part of ongoing negotiations.

“We are going to keep fighting for our customer's rights and the 52 million Americans that use crypto everyday.”

The legislation also includes measures that would prohibit crypto firms from paying interest solely for holding stablecoins, while still allowing rewards for specific activities, such as sending payments or participating in loyalty programmes.

Armstrong argued that a fair regulatory framework should let crypto firms compete on equal terms with banks and that innovation in the sector could benefit both consumers and traditional financial institutions.

Who Should Regulation Really Protect?

The standoff highlights a familiar tension in US financial policy, and from Coinlive’s perspective, it raises a key question: is regulation being shaped to protect consumers, or is it designed to shield established players from new competition?

Armstrong’s warning that banks could “put their thumb on the scale” raises a broader question for lawmakers.

If stablecoins can offer higher returns, full backing and clear rules, should regulation focus on managing risk, or on preserving the status quo?

The next draft of this bill will reveal which path Congress is prepared to take.