The White House is considering withdrawing its support for a major crypto market structure bill following Coinbase’s decision to step back from the legislation.
According to a source familiar with internal discussions, administration officials were caught off guard by the exchange’s move and view it as a serious breach of trust.
The draft legislation, known as the Digital Asset Market Clarity Act, was previously seen as a cornerstone of the administration’s crypto policy agenda.
Tensions Between Administration And Coinbase
The situation escalated after Coinbase publicly announced it could not support the current version of the bill.
Officials described the decision as a “unilateral” action that blindsided the White House and broader industry stakeholders.
One source characterized the move as a “rug pull,” arguing it undermined ongoing negotiations and momentum behind the legislation.
The same source suggested the administration could abandon the bill entirely unless Coinbase returns to talks and agrees to compromise.
“This is President Trump’s bill at the end of the day, not Brian Armstrong’s,” the source said, underscoring the growing rift.
Coinbase Raises DeFi And Stablecoin Concerns
Coinbase CEO Brian Armstrong defended the decision, arguing the draft bill would do more harm than good in its current form.
“We’d rather have no bill than a bad bill. Hopefully we can all get to a better draft,” Armstrong said earlier this week.
He pointed to provisions that he believes amount to a de facto ban on tokenized equities and impose sweeping restrictions on decentralized finance.
Armstrong also criticized expanded government access to financial records, warning it could erode user privacy protections.
Another key concern involves regulatory balance, with Armstrong arguing the proposal weakens the Commodity Futures Trading Commission while concentrating authority at the Securities and Exchange Commission.
The SEC has faced sustained criticism from the crypto industry for its enforcement-heavy approach in recent years.
Stablecoins At The Center Of The Dispute
Stablecoins have emerged as a major flashpoint in the debate.
Armstrong warned that the bill risks “killing rewards” on stablecoins, echoing industry fears that banking interests are shaping the legislation.
Banking groups have argued that stablecoin yields of around 5% could draw deposits away from traditional savings accounts.
Crypto advocates counter that these concerns are overstated and designed to limit competition rather than protect consumers.
Industry Reaction Remains Split
The broader crypto community remains divided over Coinbase’s stance.
Many users praised the exchange for pushing back against what they view as overreach by lawmakers and banks.
“Then the banks should stop trying to screw everyone over,” Coin Metrics cofounder Nic Carter wrote in support of Coinbase’s position.
Others criticized the company for exerting outsized influence over legislation that affects the entire industry.
“Coinbase is not crypto. Coinbase is one exchange in crypto,” one user commented, reflecting frustration with the power dynamics at play.
As negotiations stall, the future of the market structure bill remains uncertain, with political tensions now threatening to derail months of policy work.
