The White House is said to be weighing a withdrawal of its support for the proposed crypto market structure bill, commonly known as the CLARITY Act, a few days after Coinbase retracted its backing.
According to various reports, Donald Trump’s administration may abandon the bill if Coinbase fails to re-engage.
Why Coinbase Withdrew Its Support for the CLARITY Act
Coinbase’s move to drop its backing of the CLARITY Act comes a few months after the US House passed the bill, intended to define which agency between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) should oversee digital assets.
The version of the bill passed by the House received massive support from crypto industry players, including Coinbase. However, the problem arose when the Senate Banking Committee released a new version of the CLARITY Act, which included unpopular provisions, such as limitations on stablecoin rewards, expansion of SEC authority, and stricter disclosure policies for tokens.
On January 15, Coinbase CEO Brian Armstrong said on X that he had discovered multiple flaws after reviewing the Senate Banking Committee’s draft; hence, the decision to withdraw support.
According to Armstrong, the revised CLARITY Act restricts Decentralized Finance, weakens the role of CFTC, and gives traditional banks an edge over competitors in the stablecoin market.
White House Steps In
While Trump’s administration may back away from the CLARITY Act if Coinbase doesn’t demonstrate willingness to re-engage, it has been pushing for the Senate Banking Committee to remove proposed restrictions on stablecoin yields in an effort to win back support from Armstrong’s exchange and other industry players.
Time is Ticking
The Senate’s approval of the crypto bill before the midterm elections in November is vital, as it would enable Republicans to establish a comprehensive regulatory framework that promotes blockchain innovation in the United States.
However, if the current issues remain unaddressed and the CLARITY Act isn’t approved within the next 10 months, a newly elected Senate Banking Committee may fail to align with the Trump Administration’s favourable approach to the crypto sector. As such, crypto players in the US may continue to operate in an environment that lacks a clear rulebook.
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