Coinbase has withdrawn its support for the Senate’s crypto market structure bill, known as the CLARITY Act, and the Senate Banking Committee has delayed the markup that had been scheduled for January 15. No new date has been announced. The bill is designed to create a clearer regulatory framework by splitting oversight between the SEC and the CFTC, with the SEC handling security-like tokens and the CFTC overseeing commodities such as Bitcoin.
Coinbase’s objections focus on the current draft
CEO Brian Armstrong said the latest version contains major flaws. According to his criticism, the draft could amount to a hidden ban on tokenized equities, place DeFi under restrictions that hurt privacy, and weaken the CFTC by pushing it into a secondary role beneath the SEC. His position does not reject crypto legislation outright. It challenges the structure of this version.
A second dispute has become even more central: stablecoin rewards. Proposed changes could prevent platforms from passing reserve-generated interest on to users. Armstrong argued that such a move would raise costs for customers, reduce consumer choice, and hand banks unfair control over parts of digital finance. At the same time, he said he remains optimistic that lawmakers can still fix the bill through more work.
Stablecoin yield has become the sharpest point of conflict
The report says Coinbase currently offers roughly 3% to 4% in rewards on USDC balances. That feature helps attract users and supports the company’s business model. Banks have pushed back, arguing that these rewards pull funds away from traditional deposits, reduce lending capacity, and create unfair competition.
Coinbase rejects that argument. The company says limiting rewards would hurt consumers and weaken the U.S. digital payments system. It also warned that a ban could reduce the dollar’s position in global crypto markets. The report adds that China is now paying interest on its digital yuan.
Senate pauses the process while the industry remains split
After Coinbase pulled its support, reporter Eleanor Terrett said the Senate Banking Committee removed the planned markup from the schedule. The delay suggests lawmakers do not want to advance a bill that could deepen division across the crypto sector. The process has slowed. It has not been abandoned.
Support for the CLARITY Act still runs deep in other parts of the industry. Ripple, Circle, a16z, Kraken, CoinCenter, and the Digital Chamber have all backed the bill. Ripple CEO Brad Garlinghouse said it strikes a balance between innovation and safety while protecting investors.
Lawmakers continue defending the bill
Senate Banking Committee Chairman Tim Scott said discussions are continuing and that the parties involved are still working in good faith. He described the bill as the product of months of bipartisan work, with goals that include consumer protection, national security, and keeping financial innovation inside the United States. Senator Cynthia Lummis also praised the legislation, saying clear and fair rules could help the U.S. become a global leader in crypto.
Galaxy CEO Mike Novogratz said he believes an agreement will be reached soon and described this kind of tension as normal when large legislation nears completion. The dispute now turns on a direct question: who should receive the benefits of stablecoin interest — banks, crypto platforms, issuers, or everyday users. The answer in the next draft may shape the direction of U.S. digital asset regulation.