The latest CLARITY Act standoff has now evolved into subtle threats between the White House and Coinbase.
In a social media post on March 28, Patrick Witt, the executive director of the President’s Council on Digital Assets, issued a veiled warning that appeared to target a recent Coinbase outbreak.
According to Witt, the future Democratic administration will likely treat stablecoin yields, DeFi, and overall cryptocurrencies much worse than the current compromise in the CLARITY Act draft. Trump’s crypto advisor challenged Coinbase to block the bill and find out the Democrats’ plans.
This was a complete U-turn from an earlier one White House statement that downplayed Coinbase’s alleged opposition to the new stablecoin restrictions.
But the standoff is now public and the crypto exchange has confirmed it. In a separate statement, David Duong, head of global investment research at Coinbase, said the industry is “working on a coordinated counterproposal” to “preserve sustainable stablecoin rewards.”
Some supported Coinbase’s fight for stablecoin revenue. But critics wondered when the exchange’s CEO became a “crypto industry CEO” and de facto spokesperson, denouncing that he was holding the entire sector hostage.
However, the claims about the latest CLARITY Act draft go beyond stablecoin rewards.
Developer Protection and Bitcoin Tax Exemption Concerns
Industry policy heads also raised concerns about the treatment of DeFi in the draft rules protection for developers and the issue of double taxation of cryptocurrencies.
For his part, Jake Chervinsky, CEO of Hyperliquid Policy Center, said the draft rules undermine developer protections and warned:
Those sections need to be fixed or the bill won’t work for DeFi. If the account doesn’t work for DeFi, it doesn’t work at all.
However, Senator Cynthia Lummis assured there was bipartisan support to make changes that protect developers.
In addition, legal experts took issue with a new draft proposal that only offered a tax exemption for stablecoin transfers, but not for BTC. Once again Coinbase was blamed blocking the tax exemption of BTC.
Notably, the proposal resolved double taxation on crypto staking, but not on Bitcoin mining. This provoked strong opposition from the advocacy group Bitcoin Policy Institute (BPI). BPI added,
Today’s new draft leaves the double tax on Bitcoin mining in place and only provides relief for staking. We need a strong community pushback to show that this language is setting America and Bitcoin back.
Coinbase is looking to May for final bill approval
That said, Coinbase’s Duong predicted that the stablecoin yield issue could be resolved in the next three weeks.
According to him, a Senate bench increase could then happen in the second half of April, with possible final passage of the bill in early May if “floor time permits.”
Final summary
- The White House warned Coinbase of dire future consequences if it blocks the CLARITY Act again.
- The exchange was seeking a new stablecoin revenue deal and expected the bill could be passed in May.