Ripple CEO Brad Garlinghouse has publicly commented on a growing rift within the digital asset sector following Coinbase’s unexpected decision to withdraw its support for the Digital Asset Market CLARITY Act. His remarks come at a time when the U.S. crypto industry is facing heightened uncertainty over how future regulation will be structured and enforced.
Coinbase’s Withdrawal Shakes Legislative Momentum
The debate intensified when Coinbase CEO Brian Armstrong announced that the exchange could no longer support the CLARITY Act, a comprehensive piece of legislation aimed at clarifying regulatory oversight of digital assets. The announcement came just hours before a scheduled markup by the Senate Banking Committee, disrupting what had appeared to be coordinated industry engagement with lawmakers.
Armstrong described the draft legislation as “materially worse than the status quo,” arguing that it introduced new risks rather than resolving existing regulatory ambiguity. His criticism focused on provisions he said would effectively prohibit tokenized equities, impose restrictions on stablecoin incentives, and raise unresolved privacy issues. The decision marked a sharp reversal from Coinbase’s earlier participation in discussions surrounding the bill.
Garlinghouse’s Response
Garlinghouse weighed in on the issue during a panel discussion at the CfC St. Moritz conference in Switzerland on January 15. The session examined whether crypto-native firms can coexist with traditional public markets, a topic that closely mirrors the broader regulatory debate unfolding in Washington.
During the discussion, Garlinghouse acknowledged that Coinbase’s move caught him off guard. He said he was surprised by how forcefully the exchange rejected the legislation so late in the process. Nevertheless, he stopped short of dismissing Armstrong’s objections, suggesting that several of the concerns raised deserved fair consideration.
While recognizing the validity of some of Coinbase’s criticisms, disagreement over legislative language should not derail broader efforts to achieve regulatory clarity.
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Industry Support Remains Despite Setback
Coinbase’s withdrawal does not represent a collapse of industry support. Garlinghouse revealed that several major players, including Ripple, Circle, Kraken, and venture capital firm Andreessen Horowitz, remain committed to working with policymakers to improve the legislation rather than abandoning it.
The CLARITY Act aims to define the respective roles of the SEC and CFTC, an issue that has long contributed to regulatory uncertainty for crypto firms operating in the U.S. Garlinghouse had previously expressed optimism about the bill’s potential before it stalled following Coinbase’s exit.
While the industry has not yet reached a consensus on the path forward, much of the sector continues to advocate for engagement rather than withdrawal from the regulatory process.
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