White House threatens to pull support for crypto bill after Coinbase standoff

The White House threatens to pull support for the crypto bill after Coinbase’s unexpected withdrawal from the CLARITY Act discussions, signaling deep divisions between regulators and the digital asset industry.

White House threatens to pull support for crypto bill after Coinbase standoff

The White House threatens to pull support for crypto bill after Coinbase standoff, escalating tensions between Washington and one of the largest digital asset exchanges in the United States. The sudden policy rift reflects growing friction between the Trump administration and the crypto industry over how far regulation should go in shaping the future of decentralized finance and stablecoins.

According to reports, senior officials inside the administration were blindsided when Coinbase abruptly withdrew support for the Digital Asset Market Clarity Act, a major legislative effort designed to create a unified framework for digital asset oversight. The move triggered immediate backlash within the White House, with one official reportedly describing Coinbase’s decision as a “rug pull” on ongoing negotiations.

Coinbase defends decision to oppose the bill

Coinbase CEO Brian Armstrong took to social media to explain the company’s reasoning, arguing that the current draft of the bill could damage the very ecosystem it claims to protect. “We’d rather have no bill than a bad bill,” he stated, calling for a more balanced approach that safeguards innovation while addressing legitimate concerns around financial transparency.

Armstrong cited several red flags in the existing version of the proposal, including restrictions that could effectively suppress decentralized finance, create barriers for tokenized assets, and give government agencies expanded access to user data. The exchange warned that the bill, as written, could tilt power toward the Securities and Exchange Commission at the expense of the Commodity Futures Trading Commission, a shift many crypto advocates view as detrimental.

Insiders say that the main source of contention lies in the provisions dealing with stablecoin yields. Banking groups have argued that high yield stablecoin products compete directly with traditional savings accounts, while crypto platforms insist they represent healthy competition that drives innovation. Coinbase maintains that the proposal would “kill rewards” on stablecoins and limit user participation in decentralized markets.

White House response underscores political stakes

Sources close to the administration told Fox Business that the White House threatens to pull support for crypto bill after Coinbase standoff unless the exchange returns to the negotiation table. The Trump administration reportedly views the bill as a cornerstone of its broader digital finance agenda and believes Coinbase’s withdrawal undermines months of policy work.

“This is President Trump’s bill at the end of the day, not Brian Armstrong’s,” one insider was quoted as saying, highlighting how the issue has become as much political as it is economic. The administration is said to be considering alternative strategies to push regulatory clarity forward without direct industry endorsement, though such a move could further strain relations with leading crypto firms.

Observers note that the tension reveals how deeply divided Washington remains on digital asset governance. While the administration has shown more openness toward crypto than its predecessors, internal debates about how to manage decentralized technologies continue to slow progress on comprehensive legislation.

Industry reaction split between support and criticism

The broader crypto community remains sharply divided. Some praised Coinbase for standing up against what they see as a restrictive and bank-friendly draft. Nic Carter, cofounder of Coin Metrics, publicly supported the exchange’s position, stating that lawmakers should stop protecting incumbent financial institutions at the expense of innovation.

Others, however, criticized Coinbase for acting unilaterally. They argued that as one of the largest exchanges, the company has a responsibility to cooperate in the policymaking process rather than walk away. “Coinbase is not crypto. Coinbase is one exchange in crypto,” one user wrote, reflecting a sentiment shared by those who believe the industry’s credibility depends on constructive engagement with regulators.

This divide mirrors a broader philosophical debate within the digital asset space. Should crypto companies collaborate with governments to build a compliant future, or resist overreach to preserve decentralization and user autonomy? The White House threatens to pull support for crypto bill after Coinbase standoff has reignited this fundamental question.

What happens next for the crypto bill

Despite the controversy, negotiations are expected to continue behind closed doors. Lawmakers on both sides of the aisle understand the growing urgency of establishing clear digital asset regulations, particularly as the United States seeks to remain competitive with global markets that are moving faster on crypto frameworks.

Analysts predict that the bill will either undergo significant revisions to accommodate both industry and banking concerns or be temporarily shelved until after further consultations. Should the administration formally withdraw support, it could set back comprehensive crypto legislation by months, if not longer.

The White House threatens to pull support for crypto bill after Coinbase standoff at a pivotal time for the market. With institutional investors showing renewed interest and decentralized finance evolving rapidly, the industry faces mounting pressure to define rules that encourage growth while maintaining stability.

If a compromise can be reached, it could mark a turning point in how Washington approaches digital innovation. But if talks collapse, the standoff may become a defining example of how political and economic agendas can collide in the race to shape the future of finance.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards.