Coinbase pulled its backing for the Senate’s market structure bill because a potential ban on rewards and limited SEC flexibility would have left everyday crypto users worse off.
The context: Coinbase VP of US Policy Kara Calvert told CoinDesk TV that the company identified “fatal flaws” that tipped the scales against the legislation just hours before a scheduled markup.
- A primary dealbreaker was language that effectively eliminated rewards for customers holding a balance, which Calvert argued hurts affordability for everyday Americans.
- The exchange also feared provisions that would strip the SEC of its “exemptive relief” authority, a pillar that allows new technologies to evolve under current rules.
- Calvert noted the draft had less than 24 hours to “breathe,” leaving virtually no time to fix six amendments that would have made the bill “materially worse.”
The friction: The dispute highlights a clash between legacy banking concerns and modern crypto business models.
- Banks have pushed for protection from non-bank stablecoin rewards, arguing they compete with deposits, though Calvert disputes this premise.
- Veda Labs General Counsel TuongVy Le suggests the fight over stablecoin yield is “missing the forest for the trees,” reflecting a broader paradigm shift in which consumers expect to capture more value from their money.
Key quotes: Calvert defended the decision to walk away, describing the high-pressure legislative environment.
- “When you’re looking down the barrel of a gun, you don’t pull the trigger,” Calvert said regarding the hostile amendments Coinbase faced.
- “A bad bill… is something that tips the scale to leaving not just the crypto industry… but everyday consumers worse off,” she added.
What comes next: Despite the breakdown, industry insiders remain surprisingly optimistic that legislation can pass before the November midterms.
- Calvert believes the banking bill can get “back on track” and praised the separate
- She praised the Agriculture Committee draft for giving the CFTC critical spot market authority.
- Observers are watching to see if legislation will pass before the 2026 midterm elections.
Read more: Here’s why Coinbase and other companies soured on the major crypto bill
