Senate Delays Clarity Act Meeting After Coinbase Opposition

The Senate Banking Committee on Thursday delayed its scheduled markup hearing for the Clarity Act, after Brian Armstrong, CEO of the crypto exchange Coinbase, voiced opposition.

The legislation, which passed the House during last summer's "Crypto Week," aims to create a regulatory framework for digital assets. The price of bitcoin dipped Thursday.
 

Senate Banking Committee Chairman Tim Scott (R-S.C.) on Thursday announced that the committee will postpone its markup for the digital asset market structure bill, known as the Clarity Act, as negotiations continue.

 

I've spoken with leaders across the crypto industry, the financial sector, and my Democratic and Republican colleagues, and everyone remains at the table working in good faith," Scott said. "This bill reflects months of serious bipartisan negotiations and real input from innovators, investors, and law enforcement. The goal is to deliver clear rules of the road that protect consumers, strengthen our national security, and ensure the future of finance is built in the United States."

The Senate Agriculture Committee was also scheduled to discuss the crypto legislation Thursday, but rescheduled its crypto bill hearing to Jan. 27. The committee plans to release its version of the legislative text by close of business Jan. 21.

The Senate Banking Committee on Monday released its text for the Clarity Act. That version includes over 75 amendments to the bill, CoinDesk reported.

 

Key Topics For Debate

One of the key topics of discussion will revolve around stablecoin rewards, or interest payments for customers parking their funds. The GENIUS Act, a stablecoin bill that was signed into law last year, prohibited rewards payments. However, some companies have exploited a loophole that allows stablecoin issuers to indirectly fund payments to stablecoin holders through digital asset exchanges or other partners, according to the American Bankers Association.

The American Bankers Association wrote to the Senate in early January urging them to close the loophole, arguing that stablecoins may lure customers and become a competitor to bank deposits. The Treasury has estimated that $6.6 trillion in bank deposits are at risk without the prohibition, according to the ABA.

Other issues to address include ethics provisions, such as if public officials can profit off crypto ventures, as well as the treatment of decentralized finance platforms and their developers.

Coinbase Opposition

The Senate Banking Committee delayed the markup after Coinbase (COIN) CEO Brian Armstrong expressed opposition online late Wednesday.

"After reviewing the Senate Banking draft text over the last 48hrs, Coinbase unfortunately can't support the bill as written," Armstrong wrote, saying there are "too many issues."

The Coinbase executive noted the bill provides a "de facto ban" on tokenized equities, decentralized finance prohibitions, lowers financial privacy, erodes the Commodity Futures Trading Commission's authority, and would "kill" rewards on stablecoins, which Armstrong said allows banks to reduce their competition.

"We appreciate all 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," Armstrong said. "We'd rather have no bill than a bad bill. Hopefully we can all get to a better draft."

Robinhood CEO Chimes In

Robinhood (HOOD) CEO Vlad Tenev said that staking is one of the most-requested features on the Robinhood app. He noted that staking is still unavailable to customers in four U.S. states due to the gridlock.

He added that stock tokens are available to customers in the European Union, but not the U.S.

"It's time for the U.S. to lead on crypto policy," Tenev wrote late Wednesday. "Let's pass legislation that protects consumers and unlocks innovation for everyone. We support Congress's efforts to pass the market structure bill. There's still work to be done, but we see a path and are here to help."

Elsewhere, Interactive Brokers (IBKR) on Thursday announced that it is expanding its stablecoin offerings, according to a release shared with IBD. The broker revealed a new capability that will allow clients to fund their accounts using stablecoins, which will allow for "near-instant processing and 24/7 availability" across 170 global markets.

Bitcoin Price, Crypto Stock Action

The price of bitcoin traded near $95,300 Thursday after hitting a high of $97,860 on Wednesday.

Bitcoin rallied Tuesday after the Consumer Price Index was tamer than expected in December, which boosted hopes for another Federal Reserve rate cut.

Coinbase stock fell 6.5% Thursday. Rival exchanges Bullish (BLSH) and Gemini (GEMI) both retreated about 5% and 3%, respectively.

Stablecoin issuer Circle (CRCL) carved almost 10% lower.

Robinhood (HOOD) stock retreated nearly 8%.

IBKR stock advanced more than 3%.