Why Coinbase split with Andreessen Horowitz and the crypto industry on a key bill—and what’s next for the Clarity Act

Meanwhile, another Senate body, the Agriculture Committee, is preparing to release its own draft text on Wednesday, raising the possibility that the emerging schism could grow wider as the bill moves forward. If this happens, the industry risks alienating the coalition of lawmakers and White House figures who have lent it critical political support, and potentially seeing the legislation it has long sought slip out of reach.

“If the crypto industry can’t be aligned and it can’t be unified, then we’re in really tough shape,” said Cody Carbone, the CEO of the blockchain trade association Digital Chamber. “It’s hard to advocate from a real position of strength if members of the Senate are getting different positions, different policy points, and different viewpoints from the crypto industry.” 

The stablecoin wars

Ahead of the 2024 election, the crypto industry spent nearly $250 million to back sympathetic candidates, with Coinbase and a16z crypto emerging as the two most powerful voices. The industry helped Trump sweep into office a year ago and, since then, has notched win after win, from the passage of stablecoin legislation to the appointment of crypto-friendly heads of regulatory agencies. Through the string of victories, the sector’s key players—notorious in the past for fighting among themselves— stayed publicly unified on its political objectives, with Coinbase and a16z crypto leading the charge. 

But the success of the stablecoin bill, called the Genius Act, gave rise to unintended consequences. Namely, it spurred the banking industry to jump into the political fray over the proposed follow-on legislation, known as the Clarity Act, and demand that Congress close what it describes as a loophole that lets firms like Coinbase offer yield on their stablecoins, which are cryptocurrencies like USDC backed by dollars. The banking lobby argued that yield programs for stablecoin holders could lead to a deposit flight and threaten the broader financial system.

This push by the banking lobby led a bipartisan group of Senators to introduce yield-limiting provisions into the Clarity Act, which would establish broader regulatory frameworks around blockchain technology.

In response, Armstrong announced Coinbase’s surprise withdrawal of support for the Clarity Act in a post on X that criticized various elements of the bill, but primarily its treatment of stablecoin yields, as the Senate Banking Committee prepared to debate the legislation. 

Armstrong’s objection comes at a time when stablecoins contribute to nearly 20% of Coinbase’s revenue—$355 million in the third quarter of 2025—and as most of USDC’s growth is occurring on Coinbase’s platform. In its shareholder letter, Coinbase states that its rewards program drives USDC growth and adoption. 

According to an industry source, who spoke on the condition of anonymity to discuss sensitive political matters, Coinbase argued the base text of the Senate Banking Committee’s Clarity Act draft already represented a compromise by prohibiting most yield payments on stablecoin holdings but including a carve-out for membership or participation in loyalty, promotional, subscription, or incentive programs. A proposed amendment, however, put forth later by Sens. Angela Alsobrooks (D-Md.) and Thom Tillis (R-N.C.) would further limit yield payments and likely threaten Coinbase’s ability to promote broader USDC adoption. 

Armstrong’s X post came on the eve of the Senate Banking Committee’s markup session, where it would debate the proposed amendments and vote to advance the bill. “I think the stories would have been written, if the markup happened, that Coinbase, a public company, spends [millions] and gets rolled by the antiquated banks,” said one crypto lobbyist, who spoke on the condition of anonymity to discuss sensitive industry dynamics. 

The future of the bill

Armstrong’s post was notable not only for its impact, with the Senate Banking Committee quickly announcing the postponement of its markup session, but also for the reaction from the rest of the crypto industry. A number of prominent leaders publicly disagreed, including a16z crypto’s Chris Dixon, who posted, “Now is the time to move the Clarity Act forward.” The split reflects how stablecoin yields are a paramount concern for Coinbase’s business strategy and future growth, while the issue is less of a priority for other players in the industry, who are more willing to hammer out other disagreements about the bill further along in the legislative process. 

Even Trump’s top crypto official, Patrick Witt, took a public dig on X, quoting Armstrong’s statement “No bill is better than a bad bill” and arguing to instead push it forward. “You might not love every part of the Clarity Act, but I can guarantee you’ll hate a future Dem version even more,” Witt wrote. 

“It was a bold move,” the Digital Chamber’s Carbone told Fortune, referencing Armstrong’s post. “But I’m hoping that can all be rectified, because again, the industry must be aligned, and we should be in lockstep with the White House.”

While the Senate Banking Committee has yet to reschedule its markup session, the Senate Agriculture Committee, which oversees the parts of the bill related to commodity regulation, is planning to release its own draft on Wednesday and hold a markup session on Jan. 27. 

The question remains whether the Clarity Act retains enough Republican support in the Senate, let alone bipartisan momentum. Both the lobbyist and Carbone said that the Senate Banking Committee may have postponed its markup session due to the fear of lack of votes, rather than Armstrong’s post. But with Trump himself pushing for the legislation’s passage at Davos on Wednesday, the crypto industry’s biggest obstacle to finally achieving comprehensive legislation might be itself.