White House Threatens to Withdraw Support for Crypto Bill Over Coinbase Dispute

The political future of comprehensive crypto legislation in the United States now hinges on whether Coinbase returns to the negotiating table. Citing a source close to the Trump administration, reporter Eleanor Terrett revealed that the White House is actively considering pulling its support for the market structure bill entirely if the exchange does not resume talks. The administration’s demand is explicit: Coinbase must return with a yield agreement that “satisfies the banks and gets everyone to a deal.” The source emphasized the political ownership of the legislation, starkly stating, “This is President Trump’s bill at the end of the day, not Brian Armstrong’s.”

The administration’s reported fury stems from Coinbase’s decision earlier this week to publicly withdraw its support without prior notification. This move, perceived as a blindsiding tactic, has been characterized by White House sources as a betrayal that undermines the collaborative effort to establish regulatory clarity for cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). The fallout has been immediate, with the Senate Banking Committee indefinitely postponing its scheduled markup of the bill, casting significant doubt on its near-term legislative pathway.

Coinbase’s withdrawal was not without detailed justification. CEO Brian Armstrong outlined a series of fundamental objections to the current draft of the bill, which he argues has been co-opted by traditional banking interests. The primary point of contention is a set of draft amendments that Armstrong claims would “kill rewards on stablecoins,” effectively allowing banks to ban their competition in the yield-bearing digital asset space. This directly impacts major stablecoins like USDC and USDT, which are central to the crypto economy.

Beyond stablecoin yields, Armstrong’s critique paints a picture of a bill that would stifle innovation and erode established regulatory boundaries. He highlighted a “de facto ban on tokenized equities,” which would prevent the creation of blockchain-based versions of traditional securities. Furthermore, he pointed to broad DeFi prohibitions that would grant the government “unlimited access to your financial records and removing your right to privacy.” Finally, Armstrong argued the bill dangerously erodes the Commodity Futures Trading Commission’s (CFTC) authority, making it “subservient to the SEC” and thereby centralizing power in a way that could hamper sector growth.

Coinbase’s stance has ignited a fierce debate within the cryptocurrency industry, revealing a lack of unified front. While some figures, like Ripple’s Brad Garlinghouse, have remained notably on the sidelines, others have launched direct criticism at Armstrong and Coinbase. Notably, Citron Research has accused the exchange of undermining the bill out of fear of competition. They argue Coinbase’s official reasoning masks a desire to benefit from regulatory clarity for its core business while “not opening the door to rivals” from the tokenized securities sector.

This internal division complicates the political calculus for the White House and lawmakers. The administration’s threat suggests it views securing a compromise that appeases the powerful banking lobby as non-negotiable for the bill’s survival. The impasse presents a classic regulatory dilemma: crafting rules that protect consumers and integrate new technologies like DeFi with the traditional financial system, without crushing the very innovation they seek to govern. With the Senate Banking Committee’s schedule now in limbo, the path forward requires either a significant concession from Coinbase on stablecoin yields or a risky political gamble by the Trump administration to proceed without its support, potentially dooming the legislation.