The CLARITY Act faces turbulence as Coinbase CEO Brian Armstrong withdraws support over stablecoin yield restrictions, challenging its progress, amidst debates with the White House crypto chief David Sacks.
This clash underscores regulatory tensions impacting the crypto industry, with potential repercussions on market dynamics, including stablecoin investors and major players like Coinbase and related cryptocurrencies.
Coinbase has withdrawn support for the U.S. CLARITY Act due to concerns over stablecoin yield restrictions. These restrictions could impede industry innovation by imposing a “de facto ban,” according to CEO Brian Armstrong.
The key players involved include Coinbase, the White House, and Consensys, all debating financial innovation. The CLARITY Act’s draft proposes limiting stablecoin yields, affecting Coinbase’s existing revenue streams.
Stablecoin Yield Cap Could Slash Coinbase’s $355 Million Revenue
The stablecoin yield restrictions could impact Coinbase’s $355 million revenue from USDC yields. Market reactions include drops in Coinbase, Circle, and Bullish shares, as well as in Bitcoin and altcoin values.
Concerns center on how these yield limitations might disadvantage U.S. platforms. Historical trends show banking lobbies oppose these amendments, citing risks to $6.6 trillion in traditional finance deposits.
GENIUS Act Parallels: Innovation Risks and Historical Tensions
The debate mirrors previous tensions from the GENIUS Act, which similarly sought to control stablecoin yields. Critics argue these restrictions echo concerns from the FTX fraud era.
Experts, including Consensys’ Bill Hughes, highlight the risk of stifling innovation. “Do not shortchange innovation,” Hughes insists. They argue that such legislation could lead U.S. crypto platforms to lose competitiveness against global counterparts.
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