TL;DR

Coinbase opposes the CLARITY Act over rules restricting stablecoin yield.
The debate has caused political tension with the White House and Trump’s circle.
Prediction markets show only a 52% chance the bill passes in 2026.

U.S. crypto regulation enters another tense phase as debate around the Digital Asset Market Clarity Act exposes unresolved disputes over stablecoin yield, user rights, and financial control. Recent comments from Coinbase chief executive Brian Armstrong aim to reduce speculation about friction with the White House, yet disagreement over core provisions continues to stall progress.

Reports circulate after Coinbase withdraws support for the bill, triggering claims of political fallout. Armstrong responds by stating that the White House remains “super constructive” in ongoing talks. His remarks seek to calm market reaction, although the legislative process remains blocked by a single issue with broad implications for digital finance.

Ripple and Kraken maintain public backing for the proposal

Coinbase chooses a different route. The exchange argues that approving flawed regulation harms competition more than delay. Such resistance centers on language that restricts how platforms handle rewards linked to dollar-backed stablecoins.

Banks and trade groups push for a rule that bars crypto platforms from sharing interest with users holding stablecoins. Banking representatives argue that stablecoin rewards near 5% encourage customers to move funds away from savings accounts. Reduced deposits, according to banks, weaken the ability to fund home mortgages and small business credit at a local level.

Company leadership frames the debate as a dispute over competition, not stability. From that position, banks seek to shield profit margins rather than protect depositors. Coinbase leadership states that the proposed rule favors traditional finance by limiting alternatives that offer similar returns through digital products. Armstrong signals willingness to pause legislative progress rather than endorse restrictions viewed as anti-competitive.

Political pressure meets market signals

Journalist Eleanor Terrett reports that a source close to Donald Trump’s circle labels Coinbase’s withdrawal as a “unilateral rug pull.” According to the report, administration officials receive no advance notice before Armstrong voices opposition. Anger follows inside government channels.

Coinbase faces pressure to return to negotiations and support a compromise on stablecoin rewards acceptable to banking interests. Without agreement, official backing for the CLARITY Act weakens. Coinbase now balances regulatory clarity against product limitations built into the draft.

Public reaction spreads across social platforms

Some users express concern about losing yield on stablecoins. Others praise Coinbase for defending users against long-standing banking practices that redirect returns away from account holders. Opinions vary, yet attention remains fixed on the legislative outcome.

On Polymarket, traders assign a 52% probability to passage of the bill during 2026. Market pricing reflects uncertainty rather than confidence, mirroring political deadlock in Washington.

Meanwhile, financial activity linked to blockchain assets continues without pause. The tokenized stock market expands from a narrow experiment into a sector approaching $1 billion in value within a year. Supporters argue that regulatory clarity, paired with fair treatment of yield products, allows further expansion.

Armstrong continues to advocate clear rules that permit competition across financial products. He argues that limits on stablecoin rewards restrict user choice and slow adoption of regulated platforms. The CLARITY Act remains under negotiation, caught between banking influence, political calculation, and a digital market evolving at its own pace.

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Filed under: News - @ January 19, 2026 8:22 pm