Brian Armstrong Says Coinbase May Benefit After CLARITY Act Fails, Banks Face More Competition

Coinbase's CEO said that SEC and CFTC standards may be more lenient than the bill.

• Coinbase CEO Armstrong said that the CLARITY Act would have given Coinbase "more competition."
• He stated that SEC and CFTC regulations are "probably better for us" in the short term.
• The SEC awarded a five-year exemption for tokenized stock trading venues.

Coinbase Global (COIN) CEO Brian Armstrong said the failure of the CLARITY Act may mean less competition for the firm.

On The Daily Wolf podcast, Armstrong said that it would be good for the United States that the CLARITY Act did not pass. But there would have been a downside for Coinbase, he said. He said every major financial services firm would have begun to incorporate crypto. Armstrong said, “We’d have had tons more competition.”

The bill failed to get the 60 votes it needed. The ethics dispute was the last straw, Armstrong said.

He said the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) rules "arguably are going to be more permissive in certain ways" than the CLARITY Act. "In the short term, it's probably better for us in certain ways," Armstrong said.

Banks Left In Worse Position, Says Armstrong

During the talks, Armstrong stated that the financial lobby fought hard against stablecoin payouts. He stated that some major banks "didn't want the competition."

With the bill dead, Armstrong stated that the GENIUS Act is "already the law of the land." He confirmed that Coinbase will continue to pay rewards for stablecoins. "They're in a worse position now," he stated about the banks. He added that the banks may return in a few years to advocate for a "clarity version two."

Armstrong Sees Tokenized Stock Path

Armstrong reported that Coinbase had released its tokenized stocks a few weeks back. He stated that the product would arrive in the U.S. with the SEC’s anticipated innovation exemption.

Armstrong referred to the tokens as “real security” that is redeemable one for one with the underlying share. He noted that all other cases of tokenized equities he knew of involved either synthetics or derivatives at their core. Armstrong reported that the tokens have already achieved nearly $1 billion in trade volume. He stated that the U.S. version might have some Know Your Customer (KYC) checks onchain.

Armstrong said CFTC Chair Michael Selig recently indicated that the agency is “locked in, ready to ship” its rules. He pointed out that products like stock perpetual futures require both the CFTC and the SEC. 

SEC Moves On Tokenized Stocks After CLARITY Act Failure

This follows the SEC granting temporary relief from the definition of "exchange" to tokenized securities venues that use permissioned automated market makers and liquidity pools. The relief expires five years after publication. Venues must verify that tokenized stock provides holders with the same rights and privileges as traditional stock. SEC Chair Paul Atkins mentioned the failed bill in a statement.

COIN stock closed up over 11% on Friday. On Stocktwits, retail sentiment around COIN stock was in the 'neutral' zone, with chatter around it at 'high’ levels over the past day.

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