Brian Armstrong torpedoed the CLARITY Act in January. He pulled Coinbase's support the night before the Senate Banking Committee was supposed to vote on it. One X post, and the markup session was postponed indefinitely.
The bill — 278 pages, a year in the making, passed 294-134 in the House last July — was supposed to finally give crypto a regulatory framework in America. Instead it's sitting in limbo while Coinbase and the banking lobby fight over a single question: can stablecoins pay yield?
The White House has been trying to broker a deal. Two meetings so far, no agreement. A third is scheduled for Thursday. The administration's deadline is February 28. After that, midterm politics take over and the whole thing probably dies.
How it got stuck
The CLARITY Act wasn't always controversial. The House version sailed through with bipartisan support. It divided jurisdiction between the SEC and CFTC, created categories for digital assets, carved out DeFi from most registration requirements. The crypto industry had spent over $14.6 million lobbying for it in 2025 alone. Coinbase led with $2 million.
The trouble started when the bill moved to the Senate Banking Committee. The banking industry, fresh off losing the stablecoin fight (the GENIUS Act passed last year, giving stablecoins a regulatory path), decided to draw a line. If crypto was getting its framework, banks wanted something in return: no yield on stablecoins.
Their argument is straightforward. A stablecoin paying 4-5% APY makes a savings account paying 0.5% look like a joke. If USDC becomes a better place to park cash than a bank deposit, money flows out of the banking system. Deposit flight. Systemic risk. The usual warnings.
So a bipartisan group of senators — Angela Alsobrooks, Democrat from Maryland, and Thom Tillis, Republican from North Carolina — introduced an amendment to restrict stablecoin yield payments. The base text of the Senate draft already banned most yield, but had a carve-out for "loyalty, promotional, subscription, or incentive programs." The amendment would tighten that further.
Armstrong saw it coming. On January 13, the night before the markup, he posted on X that Coinbase was withdrawing support. "We'd rather have no bill than a bad bill," he wrote . The committee postponed the vote the next morning.
Why Armstrong went nuclear
Stablecoins aren't a side business for Coinbase. USDC revenue — mostly from the yield Coinbase earns on reserves and shares with Circle — made up nearly 20% of total revenue in Q3 2025. That's $355 million in one quarter. The rewards program, where Coinbase pays yield to users who hold USDC, is what drives adoption on the platform.
Kill the yield, kill the growth engine.
Armstrong framed it differently, of course. On the earnings call two weeks ago, he pointed out that a yield ban would actually make Coinbase more profitable in the short term. If they can't pay rewards to users, they keep the float. The company wins; American consumers lose.
Ironically, if a crypto rewards ban went into law, it would make us more profitable since we payout large amounts in rewards to our customers holding USDC.
— Brian Armstrong (@brian_armstrong) February 14, 2026
But we don’t want this to happen, it’s better for customers to get rewards, and it’s better for the US to keep regulated… https://t.co/wdZaway8KR
"A stablecoin yield ban would ironically make Coinbase more profitable, but hurt American consumers," he said.
It's a clever line. Positions the fight as consumer protection, not corporate interest. Whether anyone in Washington buys it is another question.
The industry split
Armstrong's move didn't go over well with everyone in crypto. Chris Dixon, the partner who runs a16z's crypto fund, posted that "now is the time to move the Clarity Act forward." The implication: don't blow up the bill over one provision.
Even Patrick Witt, Trump's top crypto official, took a shot. He quoted Armstrong's "no bill is better than a bad bill" line and added: "You might not love every part of the Clarity Act, but I can guarantee you'll hate a future Dem version even more."
The Digital Chamber, the blockchain trade group, tried to smooth things over. "If the crypto industry can't be aligned and it can't be unified, then we're in really tough shape," CEO Cody Carbone told Fortune. "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."
Behind closed doors, the read was harsher. One crypto lobbyist, speaking anonymously to Fortune, said Armstrong acted to avoid the headline that Coinbase "spends millions and gets rolled by the antiquated banks."
What the banks want
The banking lobby hasn't budged. In the second White House meeting earlier this month, they circulated a written "principles" document. People familiar with the text described it as a "complete ban" on yield, rewards, bonuses, and any other incentives for holding or using stablecoins. Enforcement provisions designed to prevent workarounds.
The document wasn't released publicly. It's not clear which banks authored it or whether it reflects a unified position. But the message was clear: no compromise on yield.
Armstrong's counter at Mar-a-Lago on Wednesday: the trade groups are the problem, not the banks themselves.
"For whatever reason, sometimes incumbent industries have trade groups, and they view the world with a zero-sum mindset," he said . "They're not viewing this as a positive."
His read is that small and mid-sized banks aren't actually worried about losing deposits to stablecoins. They're worried about losing deposits to JP Morgan and Bank of America. Crypto is a convenient scapegoat.
He noted that Coinbase is already building crypto infrastructure for "five of the largest banks in the world." The majors aren't running scared. They're getting in.
The math problem
The Senate needs 60 votes to overcome a filibuster. Republicans hold 53 seats. That means they need at least seven Democrats to get the CLARITY Act through.
The House version passed with bipartisan support — 294 to 134 — but the stablecoin yield fight has scrambled the coalition. Democrats who might have voted yes are now being lobbied hard by banking groups. Republicans who want to deliver a win for the crypto industry are watching Coinbase and a16z snipe at each other in public.
Polymarket odds on the bill passing jumped to 90% this week after Armstrong said he sees a "win-win-win" coming. Senator Bernie Moreno thinks April is doable. But prediction markets have been wrong before, and the February 28 deadline is nine days away.
What happens Friday
The White House meeting is scheduled for Friday morning. Same format as the previous two: crypto representatives, banking lobbyists, administration officials trying to find middle ground.
The stablecoin yield question has to get resolved somehow. Either the banks accept some form of yield (maybe capped, maybe restricted to certain programs), or Coinbase accepts restrictions and finds another growth engine, or the bill dies and everyone waits for the next Congress.
There's $220 billion in stablecoins circulating globally. USDC, Tether, a growing list of competitors. If US-regulated stablecoins can't offer competitive returns, that money moves offshore or into DeFi protocols where American regulators have no reach.
The banks want protection from deposit flight. The crypto industry wants to compete on equal footing. Both sides have spent millions to be in this room.
Nine days to figure it out.
Blockcast – Licensed to Shill: How Energy & Geopolitics Are Building a Bitcoin-Driven World, ft. Bitcoin Arabia's Lara Eggimann & Jeff Gorman
The Middle East is poised to become a pivotal hub in the global cryptocurrency ecosystem. Countries within the region are increasingly recognizing the strategic importance of integrating blockchain technology into their economic frameworks, energy markets, and geopolitical strategies, according to Lara Eggimann and Jeff Gorman, co-founders of Bitcoin Arabia , a strategic Bitcoin advisory and ecosystem builder that connects the global Bitcoin industry with the Middle East’s most powerful stakeholders.
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