Stablecoin yield fight threatens to sink CLARITY Act as Coinbase and White House clash

Coinbase CEO Brian Armstrong is defending his decision to withdraw support from the Digital Asset Market Clarity Act after the White House reportedly labeled the move a “rug pull” against the administration and the broader crypto industry.

Crypto in America host Eleanor Terrett reported on Saturday that a source close to the Trump administration said the White House is “furious” with Coinbase’s “unilateral” decision to walk away from the bill ahead of a key Senate Banking Committee markup. The source told Terrett the administration may fully abandon the legislation unless Coinbase returns to negotiations with a stablecoin yield agreement acceptable to banking interests. The White House did not respond to a request for more information from The Block. 

At the center of the dispute appears to be a disagreement over stablecoin yield. Banking groups have argued that allowing crypto platforms to offer interest-like returns on stablecoin balances could draw deposits away from traditional savings accounts, creating financial stability concerns. The Senate’s draft text sought to bar digital asset providers from paying yield simply for holding stablecoins, though it would allow activity-based rewards tied to transactions, staking, or providing liquidity, The Block previously reported.

For Coinbase, the stakes are significant. S&P Global projected that Coinbase’s stablecoin-related revenue would reach over $1 billion in 2025, much of it derived from distribution payments tied to its partnership with Circle on USDC. Provisions restricting such rewards could eliminate a major revenue stream.

The Coinbase chief executive has framed the dispute as a battle against bank lobbying efforts seeking to stifle competition through regulation. Armstrong said in response to Terrett’s reporting that the White House sent Coinbase “to see if we can go figure out a deal with the banks, which we’re currently working on.” Armstrong also said the White House was “super constructive.” 

“It just felt deeply unfair to me that one industry [banks] would come in and get to do regulatory capture to ban their competition,” Armstrong said in an interview on FOX Business’s “Mornings with Maria.” “They should have to compete on the level playing field, and I genuinely believe that.”

Armstrong withdrew Coinbase’s support for the bill late Wednesday, just hours before the Senate Banking Committee was scheduled to begin its markup session. In a post on X, he cited multiple concerns with the Senate draft text, including what he described as a “de facto ban” on tokenized equities, DeFi prohibitions that would give the government “unlimited access to your financial records,” and provisions that would erode the Commodity Futures Trading Commission’s authority in favor of the Securities and Exchange Commission.

“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 wrote. “We’d rather have no bill than a bad bill.”

The markup was subsequently postponed, throwing the bill’s immediate future into uncertainty. The legislation was approaching a “do-or-die” moment with lawmakers racing to advance it before midterm election dynamics consume the legislative calendar, The Block previously reported. 

White House crypto czar David Sacks has urged the industry to use the delay to “resolve any remaining differences,” noting that “passage of market structure legislation remains as close as it’s ever been.”

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