Lede
The White House is currently engaged in a serious deliberation over whether to withdraw its support for a pivotal cryptocurrency market structure bill. This potential shift in the administration’s policy trajectory follows a high-profile move by the cryptocurrency exchange Coinbase, which recently retracted its own backing for the legislative proposal. According to reporting from Fox Business correspondent Eleanor Terrett, who cited a source close to the Trump administration, officials within the White House are reportedly furious with the exchange’s decision. The administration reportedly views the withdrawal as a “unilateral” action that took place on Wednesday, a move that left government officials feeling blindsided as they were apparently not notified of the decision in advance.
The internal reaction to the exchange’s shift has been described in harsh terms, with one source labeling the move a “rug pull” directed against both the White House and the wider cryptocurrency industry. This development highlights a significant breakdown in the collaborative efforts that had previously characterized the push for new digital asset regulations. As the White House considers its next steps, the future of the market structure bill remains precarious, with the administration indicating that it may no longer support the current framework if major industry players continue to take independent actions that undermine the established negotiating process.
Context
The decision by Coinbase to withdraw its support was spearheaded by CEO Brian Armstrong, who has publicly outlined the exchange’s objections to the current version of the Senate Banking Committee’s legislative draft. Armstrong stated clearly that Coinbase would rather have no bill at all than be forced to accept what he categorized as a “bad bill,” arguing that the current proposal would ultimately do more harm to the industry than good. His concerns are rooted in several specific provisions that he believes would stifle innovation and compromise the privacy of digital asset users. For instance, Armstrong identified a de facto ban on tokenized equities and the introduction of broad restrictions on decentralized finance, or DeFi, as major flaws in the bill.
In addition to these structural concerns, the CEO warned that the proposal would expand government access to financial records, a move that many in the industry believe could undermine fundamental privacy protections. Armstrong also cautioned that the legislation would:
- Significantly weaken the regulatory authority of the Commodity Futures Trading Commission
- Concentrate a disproportionate amount of power within the Securities and Exchange Commission
- Threaten to “kill rewards” for users who hold stablecoins
These objections reflect a broader industry distrust of the Securities and Exchange Commission, which has been criticized for its enforcement-led approach to regulation. By shifting more authority to that agency, Armstrong argues the bill could hinder the growth of the digital economy in the United States.
Impact
The growing rift between the White House and the cryptocurrency sector carries major implications for the future of stablecoin regulation and the stability of the traditional financial system. At the heart of the disagreement are provisions related to stablecoin yields, which have become a primary flashpoint for banking interests. Banking groups have aggressively argued that allowing digital asset users to earn yields of approximately 5% on stablecoins could pose a systemic risk to traditional finance. Specifically, they fear that such yields would trigger large-scale deposit outflows from conventional savings accounts as consumers move their capital into higher-yielding digital alternatives.
In response to these concerns, the administration has reportedly issued an ultimatum concerning the future of the market structure bill. According to sources, the White House may decide to fully abandon the legislation unless Coinbase returns to the negotiating table and agrees to a compromise on stablecoin yield provisions that would be acceptable to banking interests. This places the exchange in a difficult position, as it must weigh the importance of securing a regulatory framework against the potential loss of features—like stablecoin rewards—that are central to its business model. The administration’s focus on satisfying banking interests highlights the ongoing struggle to integrate digital assets into the existing financial infrastructure without disrupting established institutions.
Outlook
The outlook for the market structure bill is increasingly clouded as the White House asserts its dominance over the legislative process. A source close to the administration emphasized that the proposal is ultimately “President Trump’s bill,” and not a document owned by Brian Armstrong or any single exchange. This rhetoric indicates that the administration is prepared to proceed with its own policy priorities, even if it means the complete collapse of the current bill. The future of the legislation now depends on whether a new consensus can be reached among the White House, the banking sector, and major crypto industry participants.
The potential withdrawal of White House support would leave the cryptocurrency industry in a state of continued regulatory ambiguity. While some industry figures, such as Nic Carter, the cofounder of Coin Metrics, have been identified as part of the broader discussion surrounding these developments, the sector remains divided on the best path forward. If the bill is indeed abandoned by the administration, market participants will likely continue to face a regulatory landscape defined by the existing powers of the SEC and the CFTC. Without new congressional guidance to clarify market structures, the industry may see a continuation of the enforcement-heavy approach that has characterized the last several years.
About the Author
