Coinbase faces CLARITY Act backlash as Citron targets stablecoin yield moat

Citron says Brian Armstrong quit backing the CLARITY Act to shield Coinbase’s stablecoin yields, as DC, Ripple, and tokenization firms race to rewrite the bill.

Citron Research on Thursday accused Coinbase CEO Brian Armstrong of opposing the Senate’s CLARITY Act to protect the exchange’s stablecoin yield business from new competition, as debate over the bill intensified in Washington and across the crypto industry.

Citron Research

In a post on X, Citron Research stated that Armstrong’s recent comments on CNBC showed concern about competition from tokenized securities firm Securitize, which holds the licenses needed to operate in that market. Citron alleged that Coinbase wants regulatory clarity without opening the door to rivals, claiming the crypto firm is pushing back because a revised version of the bill could favor Securitize over Coinbase.

Coinbase formally withdrew support for the crypto market structure bill on January 14, with Armstrong listing several objections in a public statement. These included what he described as a de facto ban on tokenized equities, expanded government access to DeFi user data, a shift of power away from the Commodity Futures Trading Commission (CFTC) toward the Securities and Exchange Commission (SEC), and draft language that could end stablecoin rewards. Armstrong stated that Coinbase would “rather have no bill than a bad bill,” adding later the same day that he remained optimistic about possible changes.

Crypto YouTuber George Tung, known as CryptosRUs, defended Armstrong, arguing that banks are resisting stablecoins due to competition. Tung pointed to the gap between average U.S. savings account yields and stablecoin yields backed by short-term Treasuries, stating that clear rules should allow banks and crypto firms to compete.

The Senate Banking Committee postponed its scheduled markup of the crypto market structure bill on January 15. Committee chair Tim Scott said discussions were continuing across party lines and with industry, but no new date was set.

Ripple CEO Brad Garlinghouse said during remarks at a CfC St. Moritz panel that Coinbase had raised “fair concerns” but expressed surprise at the strength of Armstrong’s opposition to the bill. Garlinghouse added that most of the industry was still engaged and trying to work through the issues.

Journalist Eleanor Terrett reported that tensions remain high behind the scenes, with some lawmakers, staffers, and industry players still angry about how the Banking Committee markup collapsed. However, she noted a belief among some stakeholders that the bill could recover if a deal on stablecoin yield is reached between banks, Coinbase, and Democrats in the coming days.

Terrett added that the tokenized securities provision, known as Section 505, may be less contentious than initially thought. Some tokenization firms now say the language was taken out of context, while Armstrong and others have expressed hope that it could be changed or removed entirely, with the outcome of these adjustments possibly determining whether the CLARITY Act progresses or stagnates.