Coinbase Withdraws Support for Senate Crypto Market Structure Bill

Coinbase has withdrawn its support for a key U.S. Senate crypto market structure bill, citing major concerns that the legislation would harm everyday crypto users and stifle innovation. The decision came just hours before a scheduled markup, underscoring the intensity and volatility surrounding crypto regulation in Washington.

In an interview with CoinDesk TV, Coinbase Vice President of U.S. Policy Kara Calvert said the company identified several “fatal flaws” in the latest draft. One of the most significant issues was language that would effectively ban rewards for customers who hold crypto balances on platforms like Coinbase. According to Calvert, eliminating crypto rewards would reduce affordability and limit financial benefits for everyday Americans who rely on these incentives as part of their crypto participation.

Another major concern was a provision that would significantly limit the U.S. Securities and Exchange Commission’s ability to grant exemptive relief. This authority has historically allowed regulators to adapt existing rules to new technologies, giving innovative sectors like crypto room to develop responsibly. Coinbase warned that removing this flexibility could freeze innovation and create regulatory uncertainty across the digital asset market.

Calvert also criticized the rushed legislative process, noting that the draft bill had less than 24 hours for review. During that short window, six amendments were introduced that Coinbase believed would make the legislation materially worse. Facing what she described as a hostile environment, Calvert defended the company’s decision to step back, saying supporting a bad bill would ultimately leave both the crypto industry and consumers worse off.

The dispute highlights broader tensions between traditional banking interests and modern crypto business models. Banks have argued that stablecoin rewards threaten deposit-based systems, while crypto advocates say these rewards reflect changing consumer expectations around value and yield.

Despite the setback, optimism remains that crypto market structure legislation could still advance before upcoming U.S. elections. Calvert expressed support for a separate Agriculture Committee draft that would grant the Commodity Futures Trading Commission greater spot market authority, signaling that consensus may still be possible as lawmakers revisit the issue.