The White House is reportedly considering withdrawing its support for a major crypto market structure bill after Coinbase abruptly pulled its backing, triggering a political and industry-wide standoff. According to Fox Business reporter Eleanor Terrett, sources close to the Trump administration say officials were caught off guard by Coinbase’s move and are now rethinking their position on the legislation.
The bill in question, the Digital Asset Market Clarity Act (CLARITY Act), was previously viewed as a cornerstone of the administration’s crypto policy agenda. However, tensions escalated after Coinbase warned that the latest draft could harm decentralized finance, restrict innovation, and undermine user protections.
White House angered by Coinbase’s sudden withdrawal
In a post on X, Eleanor Terrett reported that the White House is “furious” over what it describes as a unilateral decision by Coinbase to withdraw support for the CLARITY Act without prior notice. Administration officials reportedly see the move as a “rug pull” that jeopardizes months of negotiations with lawmakers and industry stakeholders.
Sources say the White House may fully abandon the bill unless Coinbase re-engages in talks and agrees to a compromise, particularly around stablecoin yield provisions. These provisions have become a major sticking point, as banking interests argue that allowing yield-bearing stablecoins could lead to deposit flight from traditional banks.
“This is President Trump’s bill at the end of the day, not Brian Armstrong’s,” a source close to the administration reportedly said, underscoring growing frustration with Coinbase’s influence over the legislative process.
Coinbase warns of risks to DeFi and stablecoins
Coinbase CEO Brian Armstrong defended the company’s decision, stating that the current draft of the CLARITY Act would do more harm than good. He said the exchange would prefer no legislation over a bill that restricts innovation or creates long-term risks for the crypto ecosystem.
Armstrong highlighted several concerns, including what he described as a de facto ban on tokenized equities, sweeping restrictions on decentralized finance, and expanded government access to financial data that could erode user privacy. He also criticized the bill for weakening the Commodity Futures Trading Commission while shifting more authority to the Securities and Exchange Commission, an agency the crypto industry has long accused of relying too heavily on enforcement actions.
Stablecoins remain one of the most contentious issues. Armstrong warned that the bill could effectively eliminate stablecoin rewards, a move he believes is designed to shield banks from competition. Banking groups have pushed back against yield-bearing stablecoins, arguing that offering returns of around 5% could drain deposits from traditional savings accounts.
Reaction within the crypto community has been mixed. Many industry figures praised Coinbase for taking a stand against what they see as bank-friendly regulation that stifles innovation. Others argue that Coinbase overstepped by positioning itself as a gatekeeper for legislation that affects the entire crypto sector, not just one exchange.
