coinbaseeffect

Coinbase recently withdrew its support for the proposed U.S. Digital Asset Market Clarity Act (CLARITY Act) due to disagreements over provisions that would limit stablecoin yield programs. This "pullout" or "rug pull," as some in the White House reportedly labeled it, caused a scheduled Senate committee vote to be postponed and highlights a major split within the crypto industry and with banking interests.
Key Insights
Stablecoin Yield Dispute: The primary conflict revolves around language in the bill that Coinbase CEO Brian Armstrong argued would effectively ban passive yield on stablecoins, giving an unfair advantage to traditional banks which lobbied heavily for such restrictions.
Regulatory Authority: Coinbase also raised concerns that the draft bill would weaken the Commodity Futures Trading Commission's (CFTC) role (the industry's preferred regulator) while expanding the Securities and Exchange Commission's (SEC) influence.
Stalled Legislation: The withdrawal led to the postponement of a key Senate Banking Committee markup session, delaying Washington's most advanced attempt to establish a comprehensive regulatory framework for digital assets.
Industry Division: While Coinbase chose to withdraw support (stating "We'd rather have no bill than a bad bill"), other major crypto firms like Ripple and a16 Crypto urged continued negotiation to improve the bill, exposing a division in the industry's approach to regulation.
Financial Overview
The CLARITY Act is a proposed U.S. federal law that aims to establish a clear regulatory framework for digital assets by delineating the oversight roles of the SEC and the CFTC.
Primary Goal
Provide regulatory certainty for digital assets by defining them as either "digital commodities" (CFTC oversight) or "investment contract assets" (SEC oversight).
Key Provisions
Mandates segregation of customer and company assets, requires detailed disclosures for projects, and creates a provisional registration pathway for existing firms.
Status
The bill passed the House in July 2025 but has stalled in the Senate due to the recent disputes.
Complementary Law
It is intended to work alongside the separate GENIUS Act, which was signed into law in July 2025 and provides a federal framework for stablecoin issuers.

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On May 15, 2025, Coinbase, the largest cryptocurrency exchange in the United States, revealed that it had suffered a significant cyberattack that could result in financial damages ranging from $180 million to $400 million. The breach, which affected a small portion of its customer base, was orchestrated with the help of insiders who were allegedly bribed by cybercriminals.
Insider Exploitation and Data Breach
Hackers reportedly bribed several overseas contractors and support staff to gain unauthorized access to internal systems. This allowed them to extract sensitive customer data, including names, email addresses, and home addresses. Although no passwords, wallet keys, or direct crypto assets were compromised, the exposed information was later used in sophisticated phishing campaigns. In these scams, attackers posed as Coinbase support personnel to trick users into transferring their cryptocurrency holdings to fraudulent wallets
Company Response and Ransom Demand
Coinbase confirmed that the attackers demanded a ransom of $20 million in Bitcoin in exchange for not leaking the stolen data. Refusing to comply, Coinbase instead offered a $20 million reward for information leading to the identification and prosecution of the perpetrators. The company has also stated that all involved employees and contractors were terminated immediately.
Financial and Market Repercussions
The company has set aside a reserve of up to $400 million to cover potential losses and customer reimbursements. Following the news, Coinbase shares fell nearly 3% in premarket trading, signaling market concern over the exchange’s cybersecurity protocols.
Wider Industry Impact
This breach is yet another example of the growing risks in the crypto space. In 2024 alone, hackers stole over $2.2 billion from various platforms, raising serious concerns about internal security and third-party vendor reliability. Coinbase’s case particularly underscores the dangers of insider threats in the digital finance industry

Conclusion

While Coinbase’s swift response and transparency have been noted positively, this incident is a stark reminder of the ongoing security challenges facing crypto exchanges. Strengthening internal controls and improving employee vetting processes will be crucial for the company to rebuild user trust and ensure long-term resilience in an increasingly hostile digital environment.#CryptoRegulation #BinanceAlphaAlert #CoinbaseEffect #CryptoCPIWatch #TradeStories $BTC $XRP
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Coinbase’s CEO unveils a bold plan to end failed lobbying, channeling tech money into pro-innovation candidates and rallying millions to reshape Washington’s future.
Coinbase Ends Decade of Failed Policy – Armstrong Reveals the Bold New Plan
Brian Armstrong, CEO of crypto exchange Coinbase (Nasdaq: COIN), has emerged as a prominent advocate for reshaping how the tech industry engages with Washington D.C.
“Tech will continue to have lots of influence in DC as long as we keep supporting candidates who are pro-tech and pro-business, regardless of which party they are in,” Armstrong remarked in a post on social media platform X on Monday. The Coinbase boss added:
It sounds crazy, but most tech policy for the last decade was giving money to people who hated us, to try and ameliorate them.
“This totally failed (and should have been obvious in hindsight),” he opined. His comments responded to a post on X by Newlimit co-founder Blake Byers, who wrote: “Silicon Valley has flipped Wall Street for power in DC. Surprisingly, it happened with a Republican elect even though Democrats have held a massive majority in tech forever. This is a few years behind tech flipping Hollywood for cultural power but still much faster than I had expected.”
Armstrong’s stance reflects Silicon Valley’s growing frustration with traditional lobbying tactics that prioritize appeasing lawmakers over fostering long-term growth. His critique highlights a broader shift in the tech industry, where companies previously spread political donations across parties to mitigate regulatory pressure. As scrutiny around cryptocurrencies, AI, and emerging technologies increases, Armstrong advocates for selectively supporting candidates who champion innovation and economic growth, rather than engaging with politicians skeptical of the industry.
This approach is already taking shape through Coinbase’s “Stand with Crypto” initiative, a grassroots movement aimed at rallying voter support for crypto-friendly legislation. The campaign has drawn millions of supporters who are eager to see policies that nurture blockchain technology and digital assets, rather than stifle them with restrictive regulations.
In the lead-up to the 2024 election, the cryptocurrency industry has backed Donald Trump’s campaign due to his pro-crypto stance. Digital asset firms also made separate donations to his inauguration efforts. Ripple pledged $5 million in XRP to the Trump-Vance Inaugural Committee, while Coinbase and Kraken each contributed $1 million.