Original Title: The Biggest U.S. Crypto Company Asserts Its Power in Washington
Original Author: David Yaffe-Bellany, The New York Times
Translated by: Peggy, BlockBeats
Editor’s Note: The "Clarity Act," which was about to enter a critical voting phase, was urgently halted due to Coinbase CEO Brian Armstrong's public opposition. The controversy centers around interest restrictions on stablecoins and the boundaries of SEC authority. In fact, with the regulatory shift following Trump's presidency, the crypto industry has gradually transformed from "being regulated" to "negotiating rules." This intervention not only changed the voting process but also exposed the real interests and power struggles behind crypto legislation.
The following is the original text:
A scheduled vote on a cryptocurrency bill on Thursday was canceled after Coinbase CEO Brian Armstrong expressed his opposition to the bill on social media Wednesday night. Image source: The New York Times
After months of negotiations, an important cryptocurrency bill was set to enter the committee voting phase in the Senate on Thursday, a critical step in the legislative process.
However, the top executive of the largest U.S. crypto company, Coinbase, spoke out on social media. Coinbase CEO Brian Armstrong wrote on X Wednesday night: "Unfortunately, Coinbase cannot support the current text of the bill. This version would be significantly worse than the current regulatory status. We would prefer no bill over a bad bill."
Hours later, the Senate vote was canceled.
Typically, the direction of a controversial legislative vote depends on a few key moderate lawmakers caught in the partisan tug-of-war. However, the changes to this landmark crypto bill this week highlight the immense influence Coinbase now wields in Washington—during Trump's presidency, the status of the crypto industry is rapidly rising.
In recent months, congressional staff have been advancing the drafting of the "Clarity Act." This nearly 300-page bill aims to establish a regulatory framework for nearly all key aspects of the crypto industry, with many rules developed and pushed by industry participants. But at the last moment, Armstrong opposed one proposed wording, arguing that it could put one of Coinbase's products at risk of being banned; he also stated that the bill would grant the U.S. Securities and Exchange Commission (SEC), the country's top financial regulator, excessive power.
Coinbase's decisive action is the result of the company's years of sustained political influence in Washington. As a publicly traded company with a market value close to $70 billion, Coinbase has funded a network of political action committees (PACs) that have invested over $130 million in the 2024 elections to support the election of more pro-crypto lawmakers.
This wave of intense political investment sends a clear message to Congress: anyone who opposes the crypto industry could become a target.
Now, leading companies in the industry have enough leverage to push their interests. Todd Phillips, a finance expert at Georgia State University, stated, "Coinbase played this move very well." A spokesperson for Coinbase declined to comment.
Founded in 2012, Coinbase provides users with a platform to buy, sell, and store cryptocurrencies like Bitcoin and Ethereum. Anyone can log into its app and complete a purchase with just a few clicks.
However, not long ago, the company faced a much harsher environment in Washington. In 2023, the SEC sued Coinbase, accusing it of operating as an "unregistered exchange," part of the Biden administration's comprehensive crackdown on the crypto industry. As a co-founder of Coinbase, Armstrong criticized the SEC for adopting a "regulation by enforcement" approach and called for clearer regulatory rules for crypto.
The election of Trump in 2024 completely changed the situation. Shortly before taking office, Trump and his sons launched a crypto business, and Trump publicly declared that he would make the U.S. the "global crypto capital."
Within weeks of Trump's inauguration, the SEC withdrew its lawsuits against Coinbase and other crypto companies. Subsequently, the crypto industry pushed for legislation to codify this regulatory "rollback" into law to prevent future governments from restarting harsh crackdowns on the crypto industry.
The SEC withdrew its lawsuit against Coinbase shortly after President Trump took office last year. Image source: The New York Times
In July of this year, with government support, the House passed its version of the "Clarity Act," which largely adopted the new regulatory framework proposed by the crypto industry. This bill would make it easier for crypto companies like Coinbase to argue that digital currencies do not fall under the category of securities, thus avoiding the federal securities regulatory framework designed to protect investors and markets.
However, the bill faced resistance as it moved through the Senate. Last fall, Senate Democrats proposed strict regulatory rules for decentralized finance (DeFi), a branch of the crypto sector, which sparked strong dissatisfaction from the industry.
At the same time, banking lobbyists pushed to include provisions in the bill that would prohibit crypto trading platforms like Coinbase from paying interest to holders of stablecoins. Stablecoins are digital currencies designed to maintain a price of $1. The banking industry believes that such "interest-bearing products" offered by crypto trading platforms would undermine banking operations, as they would compete with traditional deposit accounts.
This issue quickly became a key concern for Coinbase. A ban on interest payments could affect one of its revenue sources. Kara Calvert, Coinbase's senior policy director, stated, "The way to compete is to offer these kinds of incentive programs, which is crucial."
The latest version of the "Clarity Act" draft was released close to midnight on Monday. Congressional staff and crypto industry executives immediately intensified their review of the text, aiming to complete their reading before the Senate committee meeting originally scheduled for Thursday. This meeting, known as "markup," would give senators the opportunity to propose amendments. As the markup approached, despite other crypto industry executives still expressing support for the bill on social media, Armstrong indicated he would withdraw his support.
On Wednesday evening, South Carolina Republican Senator and Senate Banking Committee Chairman Tim Scott announced that the markup would be postponed, with a specific date yet to be determined. In a statement, he said, "All parties are still communicating in good faith. Our goal is to establish clear 'rules of the road' that protect consumers, strengthen national security, and ensure the future of finance is built in the U.S."
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