coindesk.com
Coinbase (COIN) CEO Brian Armstrong said his company decided to oppose a major digital assets bill at the last minute after discovering provisions that raised serious concerns for consumer protection and market competition, speaking in an interview with CNBC on Thursday.
"The high level principle is that you can't really have banks come in and try and kill their competition at the expense of the American consumer," he told CNBC.
Armstrong said Coinbase and other crypto firms had remained committed to negotiations until late in the process, but that a close review of the draft legislation first published near midnight on Monday revealed issues that the company believed would have been damaging if the bill had advanced out of committee.
He said the legislation, which ran hundreds of pages, contained elements that surprised industry participants and it would not have been prudent to move forward without further changes.
The U.S. Senate Banking Committee will no longer hold a planned markup of its crypto market structure bill today after crypto exchange Coinbase publicly withdrew its support for the legislation on Wednesday, compounding existing fractures in negotiations that had already left the measure on shaky ground.
The bill, which is intended to clarify how federal regulators oversee the U.S. crypto industry, was postponed late Wednesday with no new date set, according to a statement from Senate Banking Committee Chairman Tim Scott.
According to Armstrong, Coinbase ultimately concluded that allowing the bill to proceed in its existing form could have been “catastrophic” for average American consumers, prompting the company and others in the sector to come out in opposition.
He said the decision was intended to bring lawmakers back to the table and create space for revisions, rather than to halt progress altogether.
Armstrong said he expects another draft of the bill to emerge and hopes it could reach a markup within a few weeks. He described the setback as part of an ongoing negotiation process and emphasized that crypto legislation remains the industry’s top legislative priority.
Read more: The big crypto bill isn't dead, may return next month as Wall Street fight still looms
Armstrong argued that banks should not be allowed to use regulation to suppress competition from crypto companies. He said consumers should have the opportunity to earn higher returns on their money, pointing to stablecoins as an area where innovation could benefit both users and financial institutions.
He said stablecoins offer banks an opportunity rather than a threat, noting that while traditional savings accounts pay roughly 14 basis points on average, consumers can earn closer to 3.8% through stablecoin rewards.
He argued that Congress should create a level playing field for all American companies and allow competition to determine which products succeed, rather than letting incumbent banks “put their thumb on the scale.”
Addressing concerns that money moving from banks to stablecoins could disrupt the economy, Armstrong said banks play an important role in lending, but stressed that crypto companies are not engaged in fractional reserve banking.
He said stablecoins are backed one-to-one with reserves and, under proposed rules such as the GENIUS framework, would be held in short-term U.S. Treasurys, which he characterized as a safer place for consumers to store funds. Armstrong added that crypto companies should also be able to offer loans, similar to banks.
Armstrong said Coinbase will continue pushing lawmakers to act with urgency while ensuring any legislation ultimately passed serves consumers’ interests. He said he would rather see no bill passed than accept one that is poorly constructed, noting that the draft under discussion could have effectively eliminated three or four Coinbase product lines currently on the market.
He framed the breakdown in talks as a necessary step to force reconsideration of key issues, saying the industry remains focused on reaching a compromise that lawmakers, companies and consumers can all live with.
"We are going to keep fighting for our customer's rights and the 52 million Americans that use crypto everyday," he added.
CoinDesk reported Thursday that representatives from the crypto industry plan to reopen talks with U.S. Senate Democrats on Friday, according to people familiar with the matter.
Read more: Senate Democrats pursuing a Friday call with crypto industry on market structure bill