Coinbase ‘Rug Pull’ Sparks White House Fury Over Crypto Market Bill
Why Is the White House Reconsidering the Crypto Bill?
The White House is weighing whether to withdraw its support for a sweeping crypto market structure bill later than Coinbase pulled its backing, according to Fox Business reporter Eleanor Terrett. Citing a source close to the Trump administration, Terrett said officials were caught off guard by the platform’s move and are now questioning whether the legislation can proceed without industry alignment.
In a Sunday post on X, Terrett said the administration is “furious” over what it described as a unilateral decision by Coinbase to walk away from the Digital Asset Market Clarity Act. The source characterized the move as a “rug pull” against the White House and the broader crypto industry, adding that officials were not notified in advance.
According to the identical source, the administration may fully abandon the bill unless Coinbase returns to talks and accepts changes tied to stablecoin yield provisions. “This is President Trump’s bill at the end of the day, not Brian Armstrong’s,” the source said, as quoted by Terrett.
Investor Takeaway
Why Did Coinbase Pull Its Support?
Coinbase said it could not support the in its current form. Chief executive Brian Armstrong argued the proposal would create more difficultys than it solves. “We’d rather have no bill than a poor bill. Hopefully we can all get to a better draft,” he said earlier this week.
Armstrong flagged several issues. He said the draft effectively blocks tokenized equities, places broad limits on decentralized finance, and expands government access to financial records in ways that could fragileen user privacy. He also warned that the bill would tilt regulatory power further toward the at the expense of the Commodity Futures Trading Commission.
That concern resonates with a large segment of the crypto industry, which has criticized the SEC for relying on enforcement rather than clear rules. Coinbase has repeatedly argued that should clarify oversight rather than concentrate authority in one agency.
Why Are Stablecoins at the Center of the Dispute?
Stablecoins have emerged as one of the most contentious parts of the bill. Armstrong said the current draft risks “killing rewards” on stablecoins, a feature that has drawn users viewking yields close to 5% on dollar-backed tokens.
Banking groups have argued that such yields could pull deposits out of traditional savings accounts, creating stress for the banking system. Critics counter that these concerns are overstated and reflect banks’ desire to limit competition rather than address systemic risk.
The White House source cited by Terrett suggested that stablecoin yield provisions are now a key bargaining chip. Without a compromise that addresses banking interests, the administration may walk away from the bill altogether.
Investor Takeaway
How Divided Is the Crypto Industry?
The fallout has exposed sharp divisions within the crypto community. Many users backed Coinbase’s decision, arguing the bill favors incumbents and banks over open financial systems. “Then the banks should stop trying to screw everyone over,” Coin Metrics cofounder Nic Carter wrote on X.
Others took the opposite view, saying Coinbase overreached by treating its support as essential to legislation that affects the entire sector. “Coinbase is not crypto. Coinbase is one platform in crypto,” one user wrote, reflecting concerns that a single firm should not hold veto power over U.S. policy.
The split highlights a long-running tension in the industry: large, regulated firms often viewk workable compromises with lawmakers, while builders and users in decentralized systems resist rules they view as limiting core principles.
What Happens Next?
The immediate future of the is uncertain. If the White House follows through on its threat to withdraw support, the bill could stall or collapse, delaying comprehensive market structure rules yet again.
That outcome would leave the industry with the status quo: fragmented oversight, heavy reliance on enforcement actions, and ongoing disputes between regulators and crypto firms. It would also signal that even with political momentum, crypto legislation can unravel rapidly when key stakeholders break ranks.
