Coinbase CEO Slams Senate Crypto Bill: ’Worse Than No Law At All’

Coinbase's chief executive just dropped a bombshell on Capitol Hill's latest attempt to regulate the digital asset space. The proposed Senate legislation? It's not just flawed—it's a step backward.

The Regulatory Roadblock

Forget fostering innovation. The bill, as drafted, threatens to cement the US as a laggard in the global financial revolution. It layers complexity on complexity, creating a maze of compliance that only the largest, most entrenched players could possibly navigate. It's a gift to the old guard, wrapped in the language of consumer protection.

Innovation in Handcuffs

The framework doesn't clarify—it confines. By failing to provide clear definitions for digital asset securities versus commodities, it guarantees more legal limbo. Startups won't build. Developers will look elsewhere. Capital will flow to friendlier shores. The message is clear: adapt to our archaic system, or get out.

A Stark Warning for the Future

This isn't just policy critique; it's a five-alarm fire for American tech leadership. While other nations craft agile frameworks, the US Senate is poised to double down on bureaucracy. It's the financial equivalent of mandating buggy whip standards as the automobile rolls off the assembly line. The bill doesn't mitigate risk—it magnifies it by stifling the very competition that drives security and consumer choice. The final irony? A law meant to provide stability might just accelerate the industry's exodus. Talk about unintended consequences.

Coinbase CEO flags privacy risks

In an X post, Coinbase CEO stated that the company WOULD prefer no bill to what he described as a bad bill. He added that the draft contains too many problems to fix through minor changes. He warned that the text would ban tokenized equities. However, it would also restrict DeFi activity and reduce user privacy by giving the government access to financial records.

As per his list, the bill would weaken the role of the Commodity Futures Trading Commission (CFTC). It would expand the authority of the Securities and Exchange Commission. Armstrong criticised draft amendments tied to stablecoins. He said proposals that would limit or eliminate rewards on stablecoins. This MOVE would allow banks to block competition. Such changes would protect incumbents rather than consumers.

He further wrote that “We appreciate the hard work by members of the Senate to reach a bipartisan outcome.” “But this version would be materially worse than the current status quo. We would rather have no bill than a bad bill.”

Coinbase would continue to engage with lawmakers and push for changes to the draft. Meanwhile, he remains positive that a better version could still come out through further negotiations.

Over 137 amendments filed

Massive comments were made to the public after US senators unveiled draft legislation for crypto. Lawmakers expect that the bill would clarify which regulators oversee different parts of the crypto sector if it becomes law.

The crypto industry has been asking for such laws for years after witnessing multiple hacks, scams, Rug pulls, and more. One of the main goals of the bill is to define when a digital token should be treated as a security or a commodity. This definition has been at the Core of disputes between crypto firms and regulators. 

The proposal would give the CFTC authority to oversee spot crypto markets. That approach has been supported by much of the industry. Many firms view the CFTC as a more principles based regulator than the SEC. Banks have argued that paying rewards on stablecoins could pull deposits out of the insured banking system. They have warned that this could raise financial stability concerns if large amounts of money move into such products.

The draft has reportedly attracted more than 137 proposed amendments till now. Lawmakers expect several changes before any final vote. Meanwhile, Industry groups have accused banks of exerting heavy influence over the process. Blockchain Association CEO Summer Mersinger said progress is being slowed by pressure from large financial institutions.

She said that banks are seeking to rewrite the bill to protect their market position. She added that proposals to eliminate stablecoin rewards are designed to limit consumer choice. This will also block new products before they can compete.

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