Coinbase CEO Brian Armstrong says the Digital Asset Market CLARITY Act in its current form would undermine tokenization, DeFi, and stablecoin competition.
In a blistering rebuke of bipartisan efforts, Coinbase, the largest cryptocurrency exchange in the U.S., has said it cannot support the latest draft of the landmark crypto market structure legislation from the Senate Banking Committee.
Coinbase CEO Brian Armstrong said the proposed legislation—formally titled the Digital Asset Market CLARITY Act—is “materially worse than the current status quo,” setting up a high-stakes confrontation between the crypto industry and federal regulators.
“There are too many issues,” Armstrong stated in an X post. “Coinbase unfortunately can’t support the bill as written.”
One of Coinbase’s strongest objections centers on a provision that would prohibit tokenized securities—an emerging frontier for blockchain-based representations of traditional assets like stocks. Such a move, Armstrong argues, would cut off a major path for democratizing capital markets, before it ever fully materializes.
After reviewing the Senate Banking draft text over the last 48hrs, Coinbase unfortunately can’t support the bill as written.
There are too many issues, including:
– A defacto ban on tokenized equities
– DeFi prohibitions, giving the government unlimited access to your financial…— Brian Armstrong (@brian_armstrong) January 14, 2026
DeFi Restrictions and Expanded Surveillance
Furthermore, Armstrong has sharply criticized the bill’s language on Decentralized Finance (DeFi), claiming that the legislation would impose prohibitions on DeFi protocols while simultaneously granting the government “unlimited access to your financial records and removing your right to privacy.”
Perhaps most alarmingly for the stablecoin market, draft amendments would reportedly “kill rewards on stablecoins, allowing banks to ban their competition.”
Stablecoin rewards programs are a cornerstone of the DeFi ecosystem, driving user yield and market liquidity. Eliminating them would hand a significant competitive advantage to traditional banks, which have long viewed stablecoins as a threat to their dominance in payments and deposits.
Power Shift From CFTC to SEC
The proposed legislation also seeks to reshape the regulatory landscape by subordinating the Commodity Futures Trading Commission (CFTC) to the Securities and Exchange Commission (SEC). Armstrong warned this would cause an “erosion of the CFTC’s authority, stifling innovation and making it subservient to the SEC,” effectively ending the long-standing debate over which agency should oversee the majority of digital assets by consolidating power within the SEC’s more restrictive, enforcement-heavy framework.
Despite the harsh criticism, Armstrong acknowledged the effort from lawmakers.
“We appreciate all the hard work by members of the Senate to reach a bi-partisan outcome,” he wrote. However, he made his company’s position unequivocally clear: “We’d rather have no bill than a bad bill.”
Coinbase’s stance is a powerful signal to legislators that passing flawed legislation for the sake of a “win” will not have the industry’s backing. Still, Armstrong struck an optimistic note about finding common ground:
“I’m actually quite optimistic that we will get to the right outcome with continued effort. We will keep showing up and working with everyone to get there,” he added in a separate post.
Coinbase’s position stands in stark contrast to the Senate Banking Committee’s own celebratory tone. Earlier this week, Committee leadership touted the legislation as a measure that “marks a major step toward establishing the United States as the crypto capital of the world.”
This deep schism between the bill’s authors and its primary subjects highlights the immense challenge of crafting legislation that both protects consumers and fosters innovation. As the debate intensifies, Coinbase has vowed to “keep fighting for all Americans and for economic freedom,” pushing for a regulatory environment where “crypto needs to be treated on a level playing field with the rest of financial services so we can build this industry in a safe and trusted way in America.”