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 separateShe 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