TL;DR

• The White House is reportedly considering withdrawing support for the CLARITY Act after Coinbase pulled its backing.
• The dispute centers on stablecoin yield, a business line worth more than $1 billion annually to Coinbase.
• Banking groups oppose yield-bearing stablecoins, arguing they threaten traditional deposits.
• Coinbase CEO Brian Armstrong says the fight is about bank lobbying and fair competition.
• With negotiations stalled, the future of the CLARITY Act is now uncertain.

The Digital Asset Market Clarity Act was supposed to be the long-awaited framework that brought order to the U.S. crypto market. Instead, it is now at risk of collapsing under the weight of a familiar fight: who gets to earn yield, and who gets to decide. At the center of the Coinbase, the largest publicly traded crypto exchange in the U.S., and the White House, which until recently had been broadly supportive of the bill. That relationship fractured this week after Coinbase abruptly withdrew its support, triggering anger inside the administration and reopening deep tensions between crypto platforms and the traditional banking sector.

According to reporting from Crypto in America host Eleanor Terrett, the White House is now considering pulling its support for the CLARITY Act entirely unless Coinbase returns to negotiations and agrees to stablecoin yield provisions that satisfy banking interests.

The fallout highlights how fragile crypto legislation remains in Washington, even when bipartisan support appears close.

Why stablecoin yield became the breaking point

At the heart of the dispute is a seemingly narrow issue with massive financial consequences: whether crypto platforms should be allowed to offer yield on stablecoins simply for holding them. Stablecoins are digital tokens designed to track the value of assets like the U.S. dollar.  In practice, many platforms generate revenue by earning interest on the reserves backing those tokens and sharing part of that income with users. Banking groups have long opposed this model, arguing that it pulls deposits away from savings accounts and creates risks outside the regulated banking system.

The Senate draft of the CLARITY Act attempted to draw a line. It would restrict digital asset providers from paying yield just for holding stablecoins, while still allowing activity-based rewards tied to things like transactions, staking, or providing liquidity. For banks, that distinction matters. For Coinbase, it cuts directly into one of its fastest-growing revenue streams.

S&P Global has projected that Coinbase’s stablecoin-related revenue could exceed $1 billion in 2025, largely driven by distribution payments linked to its partnership with Circle and USDC. Any rule that limits yield on stablecoins threatens to shrink that business significantly. Coinbase CEO Brian Armstrong has framed the issue not as a safety concern, but as a case of regulatory protectionism. In one response, Armstrong pushed back on claims that Coinbase blindsided the administration.

Coinbase steps back, and the bill loses balance

Coinbase’s decision to pull support came late Wednesday, just hours before the Senate Banking Committee was set to begin marking up the CLARITY Act. The timing alone amplified the impact, catching both lawmakers and the White House off guard.

Brian Armstrong said the company could not stand behind the bill in its current form after reviewing the latest Senate draft. His core argument was simple: the proposal, as written, would leave the crypto industry worse off than it is today. In his view, several last-minute changes shifted the bill away from market clarity and toward tighter control that favors traditional financial institutions.

Armstrong pointed to multiple pressure points. He argued that the draft effectively blocks tokenized equities, places heavy restrictions on DeFi that could weaken user privacy, and reshapes regulatory authority in a way that sidelines the CFTC in favor of the SEC. But the most sensitive issue was stablecoin rewards. Coinbase believes the draft gives banks a regulatory path to shut down competition by preventing crypto platforms from offering yield on stablecoin balances.

Rather than accept those trade-offs, Armstrong said Coinbase would prefer no legislation at all over a framework that locks in disadvantages for the industry. He framed the move not as opposition to regulation, but as resistance to rules shaped by bank lobbying rather than open competition.

That stance has left the CLARITY Act in a fragile position. Without the backing of one of the largest U.S. crypto firms, the bill’s claim to represent industry consensus is now under question, and its path through Congress looks far less certain than it did just days ago.

Closing Thoughts 

Beyond the immediate drama, the clash exposes a deeper problem in U.S. crypto regulation. Market structure bills are no longer just about defining tokens or assigning oversight to agencies. They are about who controls financial flows in a digitized system. Banks see stablecoin yield as competition. Crypto firms see it as a natural extension of how digital money works. Lawmakers are caught in the middle, trying to balance innovation, consumer protection, and political realities.

If the White House does pull its support, the CLARITY Act could stall indefinitely. That would leave the U.S. crypto market stuck with the same regulatory uncertainty that lawmakers have promised to resolve for years. For now, negotiations appear to be continuing behind the scenes. Armstrong has said Coinbase is still working on proposals that could address concerns from community banks