The Biggest U.S. Crypto Company Asserts Its Power in Washington

A major cryptocurrency bill was headed for a committee vote in the Senate on Thursday after months of negotiations, a crucial step in the legislative process.

Then came a social media post from the top executive of Coinbase, the largest U.S. crypto company.

“Coinbase unfortunately can’t support the bill as written,” Brian Armstrong, chief executive of Coinbase, posted on X Wednesday evening. “This version would be materially worse than the current status quo. We’d rather have no bill than a bad bill.”

Within hours, the Senate vote was canceled.

The fate of a hotly contested legislative vote typically hinges on a few key lawmakers who are the moderate voices in a partisan scuffle. But what happened this week to the landmark crypto bill shows how much power Coinbase now wields in Washington, with the crypto industry newly ascendant under President Trump.

For months, congressional staff had worked on the Clarity Act, a nearly 300-page bill designed to establish a regulatory framework for virtually every aspect of crypto, with rules the industry helped write. But at the last minute, Mr. Armstrong objected to proposed language that threatened to outlaw one of Coinbase’s products and said that the bill would assign too much authority to the Securities and Exchange Commission, the nation’s top financial regulator.

Coinbases’s decisive intervention follows years of the company’s work to build a voice in Washington. A publicly traded firm worth nearly $70 billion, Coinbase helped finance a network of PACs that spent more than $130 million to influence congressional races in 2024, aiming to elect pro-crypto legislators.

The barrage of political spending sent an unmistakable message to Congress: Anyone who crosses the crypto industry could become a target.

Now the industry’s leading firms have leverage to push for their interests. “Coinbase has played its hand very well,” said Todd Phillips, a finance expert at Georgia State University.

A representative for Coinbase did not offer a comment.

Founded in 2012, Coinbase provides a marketplace for people to buy, sell and store cryptocurrencies like Bitcoin and Ether. Anyone can log onto the app and make a purchase with a few clicks.

It wasn’t long ago, though, that the company faced a much tougher landscape in Washington. In 2023, the S.E.C. sued Coinbase for operating as an unregistered exchange, part of the Biden administration’s broad-reaching crackdown on crypto. Mr. Armstrong, who had co-founded the company, attacked the S.E.C. for “regulation by enforcement” and called for more “clarity around crypto rules.”

Mr. Trump’s election in 2024 changed everything. Shortly before taking office, he and his sons started a crypto business, and Mr. Trump proclaimed that he would make the United States the “crypto capital of the planet.”

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Within weeks of Mr. Trump’s inauguration, the S.E.C. dropped its cases against Coinbase and other crypto firms. The industry pushed for legislation that would enshrine that regulatory pullback in law, preventing a future administration from reviving the crackdown.

In July, with the administration’s support, the House passed its version of the Clarity Act, which essentially adopted the crypto industry’s concept for a new regulatory system. The bill would make it much easier for crypto firms like Coinbase to declare that digital currencies are not securities subject to the system of federal oversight designed to protect investors and markets.

But the legislation faced hurdles in the Senate. In the fall, Senate Democrats proposed strict rules on decentralized finance, a branch of the crypto world, prompting outrage in the industry.

At the same time, banking lobbyists pushed for language to prevent crypto exchanges like Coinbase from paying interest to people who own stablecoins, a type of digital currency designed to maintain a price of $1. They argued that the exchanges would undermine banks by providing a product that competed with traditional deposit accounts.

The issue soon became a sticking point for Coinbase. A ban on interest could compromise one of its revenue sources.

“The way you compete is that you offer these types of incentive programs,” said Kara Calvert, a top policy executive at Coinbase. “It’s absolutely critical.”

The Senate’s most recent draft of the Clarity Act was unveiled close to midnight on Monday. Congressional staff members and crypto executives rushed to comb through it before the Senate committee meeting scheduled for Thursday, known as a markup, where senators would have a chance to introduce amendments to the bill.

With the markup fast approaching, Mr. Armstrong said that he was pulling his support, even as other crypto executives posted messages of support for the legislation.

On Wednesday night, Senator Tim Scott of South Carolina, the Republican chairman of the Senate Banking Committee, said the markup would be postponed to an unspecified date.

“Everyone remains at the table working in good faith,” he said in a statement. “The goal is to deliver clear rules of the road that protect consumers, strengthen our national security and ensure the future of finance is built in the United States.”

Sharon LaFraniere contributed reporting.

David Yaffe-Bellany writes about the crypto industry from New York. He can be reached at [email protected].

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