Key Highlights
- The White House may withdraw support for the CLARITY Act after Coinbase abruptly pulled its backing ahead of the markup session.
- Coinbase cited concerns over DeFi restrictions, privacy risks, and limits on CFTC authority in the draft crypto bill.
- Lawmakers remain divided, leaving the bill’s timeline uncertain despite optimism from some industry leaders.
The White House has reportedly expressed strong displeasure after Coinbase recently withdrew its support for the proposed CLARITY Act, a major piece of legislation intended to regulate the U.S. cryptocurrency market.
The move comes just ahead of a scheduled markup session in Congress, prompting concerns about potential delays in the bill’s progress.
According to government sources, the White House views Coinbase’s decision as a sudden and unilateral move, referring to it as a “rug pull” for both the administration and the crypto industry.
Administration may pull political support
According to journalist Eleanor Terrett, a government official who was conversant with the situation indicated that the administration is looking into removing its political support to the legislation if Coinbase “does not come back to the table with a yield agreement that satisfies the banks and gets everyone to a deal”.
Coinbase CEO Brian Armstrong issued a statement late Wednesday, highlighting concerns with the draft of the bill. Armstrong criticized provisions that could effectively restrict tokenized equities, impose limitations on decentralized finance (DeFi) platforms, and reduce the authority of the Commodity Futures Trading Commission (CFTC).
He further noted that the exchange was not going to back the bill as it is, highlighting privacy and innovation risks in the digital asset space.
Reactions of industry and government
The move has elicited mixed feelings in the industry. Some analysts assume that Coinbase is more worried about its competitive advantage because the bill might end up giving preference to other exchanges and financial institutions.
In the meantime, the White House has emphasized that the bill is aimed at controlling the larger digital economy, and not a specific exchange.
Authorities also observed that the CLARITY Act is connected to the policy agenda of President Donald Trump, which underlines the political importance of the bill in addition to the opposition of Coinbase. There are a number of senators who have promised to resume the legislation.
Senator Mark Warner, a Democratic senator representing Virginia, said that the bill has a way forward, and Senator Cynthia Lummis admitted that it would take time to review and revise the bill.
The leaders of the industry, such as Galaxy Digital CEO Mike Novogratz, have been optimistic that the bill might be passed in the coming few weeks, with positive talks with Congress members.
Background and broader context
The CLARITY Act is designed to create more explicit regulations on digital assets, such as stablecoins, tokenized securities, and DeFi platforms. Although the bill may open capital-raising opportunities to crypto businesses and bring about regulatory certainty, opponents such as Coinbase caution that the new regulations may be oppressive to innovation.
The controversy is preceded by comparable controversies in 2025, when large U.S. exchanges and blockchain supporters collided on the issue of privacy, DeFi regulation, and the role of federal authorities in the regulation of crypto.
At this point, the timeline of the bill is not clear. Although the markup session is on hiatus, legislators are considering amendments to support industry interests.
According to market observers, any delay in federal regulation may affect the adoption of digital assets, trading, and competitiveness of the U.S. in the international crypto market.
Also Read: US Senate Delays CLARITY Act Markup, Casting Doubt on Crypto Rules in 2026
