The latest CLARITY Act standoff has now devolved into subtle threats between the White House and Coinbase.
In a social media post on the 28th of March, Patrick Witt, the executive director of the President’s Council on Digital Assets, issued a veiled warning that seemed aimed at a recent Coinbase holdout.
According to Witt, the future Democratic administration will likely treat stablecoin yield, DeFi, and overall crypto way worse than the current compromise in the CLARITY Act draft. The Trump crypto advisor dared Coinbase to block the bill and find out Democrats’ plans.
This was a complete U-turn from an earlier White House statement that downplayed Coinbase’s alleged opposition to the new stablecoin restrictions.
But the stalemate is now public, and the crypto exchange confirmed it. In a separate statement, David Duong, Coinbase’s head of global investment research, said the industry was “working on a coordinated counterproposal” to “preserve sustainable stablecoin rewards.”
Some supported Coinbase’s fight for stablecoin yield. But critics wondered when the exchange’s CEO became a “crypto industry CEO” and a de facto spokesperson, decrying that he was holding the entire sector hostage.
However, the contentions on the latest CLARITY Act draft go beyond stablecoin rewards.
Developer protections and Bitcoin tax exemption concerns
Industry’s policy chiefs also raised concerns about the draft rules’ treatment of DeFi developer protections and the crypto double taxation issue.
For his part, Jake Chervinsky, CEO of Hyperliquid Policy Center, said the draft rules undermine developer protections and cautioned,
Those sections must be fixed, or the bill doesn’t work for DeFi. If the bill doesn’t work for DeFi, it doesn’t work at all.
However, Senator Cynthia Lummis assured that there was bipartisan support to include changes that protect developers.
Separately, legal experts had issues with a new draft proposal that only offered a tax exemption for stablecoin transfers, but not BTC. Again, Coinbase was blamed for blocking the BTC tax exemption.
Notably, the proposal fixed the double taxation of crypto staking but not Bitcoin mining. This elicited a strong opposition from the advocacy group Bitcoin Policy Institute (BPI). BPI added,
Today’s new draft leaves the double taxation on Bitcoin mining in place and only provides relief to staking. We need a strong community push back to show that this language sets America and Bitcoin back.
Coinbase eyes May for final bill passage
That said, Coinbase’s Duong projected that the stablecoin yield issue could be resolved in the next three weeks.
According to him, a Senate Banking markup could then happen in H2 April with a potential final passage of the bill in early May if “floor time allows.”
Final Summary
- White House warned Coinbase of the dire future consequences if it blocks the CLARITY Act again.
- The exchange sought a new stablecoin yield deal and expected the bill could be passed in May.
