- Coinbase warns it may pull support for the CLARITY Act if DeFi limits and stablecoin reward bans stay in place.
- The CLARITY Act debate has intensified before the Senate vote as crypto and banking groups push sharply different policy goals.
- Lawmakers are facing rising pressure as banks warn of deposit losses while crypto firms defend stablecoin rewards and DeFi tools.
Coinbase is signaling that its support for the CLARITY Act could weaken as lawmakers consider tighter rules on DeFi and stablecoins. The warning arrives days before the Senate markup, placing fresh pressure on negotiators.
Moreover, the dispute highlights widening gaps between crypto firms and traditional banks. Consequently, the bill’s final language now faces sharper scrutiny.
Coinbase Raises Concerns Ahead of Senate Markup
Coinbase has urged lawmakers to resist limits on decentralized finance tools. The company argues that the draft provisions risk undermining core DeFi features. Additionally, the proposal would restrict stablecoin issuers from offering rewards. As a result, Coinbase has indicated it could reconsider its backing if the language remains unchanged.
People familiar with the discussions say the exchange views the reward ban as a setback for domestic innovation. Furthermore, Coinbase believes such limits could push activity offshore. Therefore, the company wants lawmakers to preserve flexibility for platforms and issuers. The stance reflects growing industry anxiety as the bill advances.
Advocacy Groups Intensify the DeFi Debate
At the same time, an advocacy group called Investors For Transparency has entered the debate. The group claims DeFi provisions threaten the banking system’s stability. Consequently, it has launched a campaign urging lawmakers to remove DeFi and stablecoin reward elements from the bill.
Meanwhile, crypto-focused advocates have mobilized against those claims. Stand With Crypto has coordinated a large outreach effort to senators. The group supports keeping stablecoin reward programs intact. Moreover, it argues that reopening those provisions could derail progress on market structure clarity. This push underscores the industry’s unified response.
Banking Sector Warns of Deposit Risks
In parallel, banking representatives have raised concerns about potential deposit outflows. They argue that stablecoin rewards could draw funds away from traditional accounts. Estimates cited by industry groups suggest potential exposure of up to $6.6 trillion. Hence, banks view the reward model as a competitive threat.
However, crypto firms counter that stablecoins already play a central role globally. They also note that reward programs could offer users yields near 3.5 percent. Issuers such as Circle could expand these programs under current proposals. Therefore, banning rewards could directly affect exchanges like Coinbase and limit consumer options.
Vote Looms as Industry Lines Harden
As the January 15 Senate vote approaches, positions continue to harden. Lawmakers are now facing pressure from both financial sectors. Consequently, the CLARITY Act has become a focal point for broader policy tensions. The outcome will shape how DeFi and stablecoins operate within the United States framework.
