Despite a sharp legislative speed bump caused by Coinbase’s sudden withdrawal of support, the U.S. crypto market structure bill remains on a trajectory for passage, according to a new research note from HSBC.
The banking giant’s analysts, Daragh Maher and Nishu Singla, argued in a report released Wednesday that while Coinbase’s opposition has successfully delayed Senate Banking Committee markups, it is unlikely to be the “death knell” for the legislation, widely referred to as the CLARITY Act.
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The Institutional Imperative
The core of HSBC’s argument rests on the inevitability of regulation. The report suggests that the demand for a legislative baseline—specifically to provide the stability required for massive institutional entry—will override individual corporate objections, even from a player as dominant as Coinbase.
“While Coinbase CEO Brian Armstrong has signaled a preference for ‘no bill over a bad bill,’ we view this as a negotiation tactic rather than a permanent exit from the process,” the HSBC note read. The analysts believe Armstrong is likely to accept a “reasonable compromise” rather than risk leaving the U.S. market in a perpetual regulatory gray zone, especially as competitors like Circle and Ripple continue to engage constructively with lawmakers.
Coinbase’s “Dealbreakers”
The friction began earlier this week when Coinbase CEO Brian Armstrong publicly yanked support for the Senate’s draft of the market structure bill. Armstrong cited four “critical flaws” that made the legislation unsupportable in its current form:
- Tokenized Equities Ban: Armstrong described language in the bill as a “de facto ban” on tokenized real-world assets (RWAs), a sector viewed as a massive future growth engine.
- DeFi Privacy: The bill allegedly expands government access to decentralized finance (DeFi) user data, imposing Bank Secrecy Act obligations on protocols that cannot technically comply.
- Stablecoin Yields: Draft amendments reportedly threaten the ability of exchanges to offer rewards or interest on stablecoins—a key revenue stream for Coinbase.
- CFTC vs. SEC Authority: Coinbase argues the current draft erodes the Commodity Futures Trading Commission’s (CFTC) authority, tipping the scales back toward an enforcement-heavy Securities and Exchange Commission (SEC).
Following Armstrong’s comments, the Senate Banking Committee postponed its markup session, acknowledging that proceeding without the U.S.’s largest exchange was politically untenable in the short term.
Market Reaction & Real-Time Prices
The legislative uncertainty has introduced volatility into the markets, though major assets remain resilient. Investors appear to be weighing the short-term regulatory delay against the long-term bullish signal that a bill is still being actively negotiated.
Real-Time Market Data (as of 10:45 AM ET):
- Bitcoin (BTC): Trading at $89,313, up approximately 0.7% on the day. Bitcoin remains relatively insulated from U.S. exchange-specific regulation, acting more as a global macro asset.
- Ethereum (ETH): Showing strength at $3,013 (+2.6%), likely buoyed by optimism that the final bill will still clarify the commodity status of ETH.
- Coinbase Global (COIN): The stock has taken the brunt of the negative sentiment, trading down 1.4% at $208.85. Investors are reacting to the direct political risk and the potential threat to the exchange’s stablecoin and staking revenue lines mentioned in Armstrong’s objections.
Industry Split: A House Divided?
HSBC’s report also highlighted a divergence in strategy among crypto giants. While Coinbase has taken a hardline public stance, other major players like venture capital firm Andreessen Horowitz (a16z) and Ripple Labs have kept their seats at the table.
Ripple CEO Brad Garlinghouse noted that while Coinbase raised “fair concerns,” the rest of the industry is “leaning in” to fix the bill rather than scrap it. This split suggests that lawmakers may find a path forward by satisfying a coalition of other industry heavyweights, eventually pressuring Coinbase to return to the fold.
What’s Next?
Negotiations are currently continuing behind closed doors. HSBC predicts that a revised markup could be scheduled as early as February, provided lawmakers can offer concessions on the “tokenized equity” language—the area where compromise seems most technically feasible.
For now, the message from the banking sector is clear: The U.S. government is determined to regulate crypto, and the train has left the station, with or without its biggest passenger.
Disclaimer: This post is a compilation of publicly available information. MEXC does not verify or guarantee the accuracy of third-party content. Readers should conduct their own research before making any investment or participation decisions.
