White House May Withdraw Support for CLARITY Act After Coinbase Pullout, Crypto Markets Slip
The White House warned it may withdraw support for the CLARITY Act after Coinbase pulled its backing, prompting a market pullback. The CLARITY Act aims to define SEC and CFTC roles and set rules for digital assets, DeFi and stablecoins. Coinbase cited concerns over tokenized stocks, restrictions on DeFi, broad surveillance provisions and shifts that would expand SEC authority; the immediate dispute centers on rules for yield-bearing stablecoin products and whether banks can offer interest on exchange-held stablecoins without disadvantaging crypto-native firms. The announcement led to declines across crypto: BTC fell toward about $95,000 and ETH near $3,295 as total market cap dropped to roughly $3.2 trillion and 24‑hour volume fell ~25% to $90B. Banks lobby that interest-bearing stablecoins would drain deposits and reduce lending. Other firms — Robinhood, Kraken, Ripple and Galaxy — still support the bill and say it would bring regulatory clarity. Betting markets (Polymarket, Kalshi) place passage odds near 50–55%. Traders should watch for White House signals, whether Coinbase rejoins talks, any legislative amendments on stablecoin yields and jurisdictional splits between the SEC and CFTC. Near-term, uncertainty raises downside risk and volatility; long-term outcomes depend on whether a revised compromise emerges that preserves market access for exchanges and DeFi builders.
Bearish
The news increases regulatory uncertainty and short-term downside risk for major cryptocurrencies, particularly BTC and ETH. Coinbase’s withdrawal threatens a high-profile compromise that markets had priced in as reducing U.S. regulatory risk; the White House’s warning to withdraw support raises the probability the bill stalls or is materially altered. Immediate market reaction — price declines and lower volumes — signals heightened volatility. Key drivers of continued pressure: unclear rules on yield-bearing stablecoins (which affect exchange product offerings and liquidity), a jurisdictional fight between the SEC and CFTC, and potential shifts that could restrict DeFi or tokenized assets. In the short term, traders face greater tail-risk and should expect increased volatility and potential sell-side pressure as positions are repriced. In the medium-to-long term, outcomes hinge on whether a revised agreement restores broad industry support; a durable bipartisan bill that balances bank and crypto interests would be stabilizing, while failure or a bill favoring incumbents could slow institutional adoption and push innovation offshore, sustaining bearish pressure on domestic market prices.