The Clarity Act: Why Brian Armstrong Prefers No Bill Over a Bad Bill

Coinbase's Stance on the Clarity Act

• 💡 Brian Armstrong, Coinbase CEO, now opposes the Clarity Act, stating he prefers "no bill than a bad bill," despite the crypto industry's prior calls for regulation.
• 🎯 His opposition stems from specific provisions in the proposed bill that would significantly impact Coinbase's revenue.

The Genius Act Loophole

• 📜 The previous Genius Act (Section 3G) explicitly prohibited stablecoin issuers from paying interest or yield directly to customers.
• 🔑 However, a loophole allowed issuers like Circle to pay an intermediary (Coinbase), which then passed on rewards to customers, effectively bypassing the direct ban.
• 💰 This arrangement proved highly profitable for Coinbase, generating approximately $910 million in revenue last year.

Threat from Clarity Act Section 401

• ⚠️ The proposed Clarity Act, Section 401, aims to close this loophole by expanding the ban to include affiliates and business partners.
• 🚫 It would prohibit issuers from "arranging for an affiliate or significant business partner to pay interest or yield" through revenue splits, directly targeting the current Circle-Coinbase model.
• 📉 This provision would effectively eliminate Coinbase's lucrative stablecoin reward business.

Activity-Based Rewards (Section 402)

• ✅ Section 402 of the Clarity Act does permit activity-based rewards, similar to credit card points, for active use of stablecoins.
• ❌ However, these rewards would not be as profitable as the current passive interest model, which is based solely on holding stablecoins.

Preference for Existing Legislation

• ⚖️ Brian Armstrong's statement implies a preference for the current Genius Act as it stands, which permits Coinbase's existing and profitable business model.
• 🛑 He views the Clarity Act in its current markup as a "bad bill" because it would dismantle a significant portion of their revenue.