Coinbase VP says ’fatal flaws’ in Senate crypto bill forced withdrawal of support
Coinbase’s vice president of global policy, Jamie Rosenberg, said the company abruptly withdrew support for a Senate crypto bill after discovering “fatal flaws” that would have created harmful regulatory gaps. Coinbase initially backed the measure as a pathway to clearer crypto regulation but reversed course when internal and external legal reviews identified provisions that could exempt major crypto firms from broker-dealer obligations and leave consumers unprotected. Rosenberg warned these loopholes might shift oversight away from the SEC and create systemic risks by allowing certain firms to escape standard custody and trading rules. The decision underscores growing industry concern about rushed legislative compromises and highlights tensions between crypto firms, regulators and lawmakers over how digital assets should be regulated. Market details, specific bill language and identified loopholes were not fully disclosed in Rosenberg’s statement, but the move could influence ongoing negotiations in the Senate and prompt calls for tighter, more explicit regulatory language.
Bearish
The withdrawal of Coinbase’s support signals heightened regulatory uncertainty. Traders dislike uncertainty because it increases perceived legal and compliance risk for major exchanges and tokens. If the bill contained loopholes that could have reduced oversight, removing support may prolong unclear regulatory frameworks — delaying institutional adoption and product rollouts that rely on legal certainty. Historically, similar regulatory setbacks (for example, contentious SEC actions or stalled U.S. legislation) have correlated with short-term price weakness in major cryptocurrencies as market participants price in policy risk. Short-term impact: increased volatility and downward pressure as traders react to uncertainty. Long-term impact: if the withdrawal forces clearer, stricter legislation, the market could eventually benefit from improved investor protections and greater institutional confidence; however, in the interim, expect continued regulatory-driven sell pressure and cautious positioning by institutions and retail traders.