On Tuesday, the executive director of the President’s Council of Advisors on Digital Assets took aim at Coinbase’s decision last week to withdraw support for the Senate’s crypto market structure bill, in the latest sign that lawmakers are growing weary of industry players weighing their near-term commercial exposure.
“‘No bill is better than a bad bill,’” Patrick Witt began in his tweet, referring to Coinbase CEO Brian Armstrong’s comments when his exchange pulled support for the CLARITY Act. “What a privilege it is to be able to say those words thanks to President Trump’s victory, and the pro-crypto administration he has assembled.”
On January 14, Armstrong publicly withdrew the exchange’s backing for the bill alongside other industry participants shortly before a scheduled markup, citing concerns about provisions on stablecoin rewards, tokenized equities, and regulatory scope.
In his tweet, Witt said that delaying legislation is unrealistic and warned that rejecting imperfect rules now risks far harsher regulation under the Democrats down the road.
“Do we take advantage of the opportunity to pass a bill now, with a pro-crypto president, control of Congress, excellent regulators at the SEC and CFTC to write the rules, and a healthy industry? Or do we fumble the ball and allow Dems to write punitive legislation in the wake of a future financial crisis à la Dodd-Frank?” he wrote.
Witt’s comments follow on the heels of venture capital firm Andreessen Horowitz, whose top crypto executive, Miles Jennings, countered Armstrong last week, saying that while the bill “isn’t perfect,” it could “create an open and decentralized future,” that is “more resilient to corporate extraction, government censorship, and algorithmic distortions.”
Coinbase’s opposition to the crypto market structure bill in its current form centers on Democratic-backed and bank industry-led changes that could restrict stablecoin yield by potentially classifying customer rewards and balance-related earnings as regulated interest or lending activity.
After Coinbase Reversal Forces Delay on Crypto Bill, Is There a Path Forward?
Yielding results
Industry observers say risk stems from ambiguity in how different forms of yield would be defined under the bill.
“The key changes are those that make it difficult to distinguish between issuer-paid interest and activity-based rewards, particularly where liquidity provision or transaction-driven incentives risk being treated as prohibited yield,” Jakob Kronbichler, CEO of on-chain credit marketplace Clearpool, told Decrypt.