- The White House is also likely to withdraw support for the crypto market structure bill, as Coinbase has already pulled its support.
- Coinbase listed DeFi regulations, equity tokenization, privacy, and rewards in stablecoins.
- Yield regulation of stablecoins is currently a point of contention between banks, lawmakers, and cryptocurrency platforms.
Tensions have escalated between the Trump Administration and the Coinbase exchange because the platform suddenly pulled its support for the Digital Asset Market Clarity Act, and rumors have been spreading that the Trump White House is pulling the plug on the bill.
Fox Business reporter Eleanor Terrett said in a Sunday post on X that the White House is considering pulling its support for the Senate’s crypto market structure bill following Coinbase’s move. Terrett cited a source close to the administration who claimed officials felt blindsided by Coinbase’s decision and now view it as a direct challenge to the White House’s authority over the legislation.
“The White House is said to be furious with Coinbase’s unilateral action,” the source told Terrett, calling it a “rug pull” against the administration and the broader industry coalition pushing for regulation.
According to the report, officials may fully abandon the bill unless Coinbase returns to negotiations and accepts a compromise, especially on stablecoin yield rules that banking groups have aggressively supported. “This is President Trump’s bill at the end of the day, not Brian Armstrong’s,” the source added.
Coinbase pulls support, warns bill harms crypto
Coinbase CEO Brian Armstrong stated on Wednesday that his company, and Coinbase itself, were unable to support the draft of the Senate Banking Committee because it would actually lead to a worse situation than what they are dealing with now. “We’d rather have no bill than a bad bill,” Armstrong said. This is their way of saying that it is better to stick with what they have.
Among the major points raised by Armstrong were the following: “The draft will effectively ban tokenized equities,” in addition to broad restrictions on decentralized finance and increased government access to financial information in a way that invades privacy. He also argued the proposal would weaken the Commodity Futures Trading Commission while giving the Securities and Exchange Commission more power, an outcome many crypto firms oppose due to the SEC’s enforcement-first posture in recent years.
Stablecoin yield provisions remain the biggest flashpoint. Armstrong said the draft risks “killing rewards” on stablecoins, echoing industry fears that lawmakers are shaping the bill to protect traditional banks from competition.
Banking trade groups have pushed hard for restrictions, arguing that stablecoin yields of around 4% to 5% could pull deposits out of savings accounts, especially from community banks. Barron’s cited concerns that stablecoin interest could trigger major deposit outflows and reduce bank lending capacity.
Political fallout threatens the entire market structure push
This standoff has introduced actual political risks for the bill. The crypto market structure outline would establish how the SEC and CFTC regulate digital assets, which is considered essential for institutional adoption. This withdrawal by Coinbase has introduced actual disruption, including the postponement of the timeline by the Senate Banking Committee.
Now, if the White House follows through and pulls support, lawmakers could struggle to build enough momentum to move the bill forward quickly, especially if industry unity fractures.
Crypto community splits on Coinbase’s strategy
Reaction across crypto has been mixed. Many users praised Coinbase for refusing to accept a bill they believe protects banks at the expense of innovation. Nic Carter, cofounder of Coin Metrics, criticized banking pressure in blunt terms, suggesting banks should stop trying to block competition.
However, others argued Coinbase overplayed its hand. Critics said Coinbase is only one exchange and should not act like it can veto industry-wide legislation, particularly when market structure clarity affects every sector of crypto.
At this point, the negotiations seem inconclusive. In either case, one thing has become clear: The war over stablecoin rates and DeFi limitations has become the “line in the sand” within the most significant crypto bill in Washington.
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