The standoff over crypto regulation between Coinbase and the US Senate intensified this month when the exchange formally told Senate offices that it cannot support the latest draft of the CLARITY Act, marking its second withdrawal from legislation that could define US digital asset law in a generation.
Summary
- Coinbase told the Senate Banking Committee offices that it has significant concerns about the Tillis-Alsobrooks compromise draft, which prohibits passive yielding of stablecoin balances and restricts access to transaction size data used to calculate rewards, changes that attack the infrastructure Coinbase uses to generate stablecoin revenue rather than simply limiting a single product feature.
- Coinbase reported $1.35 billion in stablecoin revenue in 2025, largely tied to its USDC distribution deal with Circle; Provisions eliminating stablecoin performance could strip the exchange of an estimated $800 million in annual revenue, making this a fundamental financial issue rather than a political objection.
- Chief Executive Brian Armstrong first withdrew his support in January, stating that “we’d rather have no bill than a bad one”; The second formal withdrawal, reported by Punchbowl News around March 25, came after a revised draft that further tightened the language on returns rather than making it more flexible.
like the street reportedCoinbase representatives told Senate offices that the exchange could not yet support the latest version, citing major concerns about the stablecoin’s performance language. Armstrong confirmed that talks are ongoing. The Tillis-Alsobrooks draft goes beyond the existing performance limitations in the base bill by also restricting the exchange’s access to transaction size data, which is the calculation layer that makes volume-based or activity-based stablecoin rewards technically feasible. For Coinbase, that second provision is the most alarming because it eliminates not only a feature of the product but also the technical infrastructure necessary to generate performance.
Stablecoin revenue represents about 20 percent of Coinbase’s total revenue in 2025. Under its USDC agreement with Circle, Coinbase receives the majority of interest income on USDC held on its platform. Any restriction that eliminates the structural ability to calculate or distribute performance directly attacks that line of income. Each round of negotiations since January has reduced performance exclusions, not expanded them. Coinbase’s influence is real: A margin without its support signals to senators on both sides that the industry consensus has fractured and that the bill needs bipartisan votes it can’t afford to lose.
The industry divide and what it means
Coinbase is not the entire industry. Andreessen Horowitz and other major investors have publicly supported the CLARITY Act even in its current form, arguing that the institutional legitimacy the bill provides outweighs the revenue concessions of stablecoins. An industry call in late March reportedly saw strong disagreements about how to proceed. As crypto.news has done reportedThe CLARITY Act faces four factions, each with effective veto power, and Coinbase’s withheld support does not automatically override the bill, but it significantly complicates the vote count.
What the May deadline means for both sides
As crypto.news has done notedThe GENIUS Act stablecoin framework advances through financial regulators regardless of CLARITY’s fate. What CLARITY provides, including SEC and CFTC jurisdictional clarity, DeFi supervisory rules, and tokenized capital frameworks, has no alternative legislative path. Sen. Bernie Moreno has warned that losing May risks losing the bill entirely in the midterm season. The Senate Banking Committee’s margin goal remains the end of April, and Coinbase’s continued refusal to support the draft is the biggest hurdle between that goal and an actual vote.
