The U.S. Senate's long-awaited comprehensive proposal for cryptocurrency regulation hit an unexpected snag after Coinbase, one of the world's leading exchanges, reversed its stance. Upon the legislative text's release, Coinbase announced it was withdrawing support, sending ripples through both the crypto sector and Washington's political landscape.
Why Did Coinbase Pull Out?
On Wednesday, Coinbase CEO Brian Armstrong stated that the Senate draft in its current form could not be supported. He pointed to several key issues: handling of tokenized stocks, uncertainties in DeFi, clauses potentially abolishing stablecoin rewards, and the role assigned to the SEC. Sources close to the exchange said the decision was not spontaneous but came after intense internal deliberations following the Monday night release of the 270+ page draft, which included new sections targeting illicit finance. Coinbase concluded the regulations did not align with its customers' interests.
Tight timelines added pressure. Amendment submissions were due Tuesday afternoon, with a committee meeting scheduled for Thursday—leaving insufficient time for thorough industry discussions. Coinbase pushed for a longer timeline to enable constructive engagement with Senate Banking Committee members.
Senate Process in Flux
Amid the backlash, Senate Banking Committee Chair Tim Scott announced late Wednesday that the session to review the draft had been postponed. Scott emphasized continued consultations with the crypto sector, financial circles, and bipartisan senators, aiming for clear and enforceable rules. Insider reports suggested the delay stemmed largely from a lack of sufficient support for a vote.
Democratic Senator Ruben Gallego, a key author of the draft, criticized the cancellation of a planned meeting and said he could not back the current bill, highlighting the fragile political consensus.
Industry voices remain split despite Coinbase's withdrawal. Some companies argue efforts should continue. Ripple CEO Brad Garlinghouse expressed optimism that a fair debate could still happen and that issues could be resolved at the committee stage.
As of now, the draft's future remains uncertain. Whether the Senate can bridge differences and rebuild consensus will shape the pace of U.S. crypto regulation.