Key Takeaways
- The digital asset advisor described Coinbase CEO’s position as a luxury afforded only by the current administration’s favorable stance toward digital assets.
- The exchange had withdrawn support for CLARITY Act citing concerns over language affecting tokenized securities, decentralized finance privacy protections, and restrictions on stablecoin yield products
The US President Donald Trump administration’s top digital assets advisor has issued a stark warning to critics of crypto market structure bill: accept compromise now or face harsher regulations later.
Patrick Witt, who leads the President’s Council of Advisors for Digital Assets, pushed back against the idea that the crypto sector can operate without formal rules indefinitely. He took to X on Tuesday to directly challenge cryptocurrency exchange Coinbase CEO Brian Armstrong’s recent assertion that “no bill is better than a bad bill.”
“Assuming a multi-trillion-dollar industry will continue to operate indefinitely without a comprehensive regulatory framework is pure fantasy,” Witt stated, calling Armstrong’s position a luxury afforded only by the current administration’s favorable stance toward digital assets.
The debate centers on pending legislation that would clarify jurisdictional boundaries between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) in overseeing cryptocurrency markets. Both the Senate Banking and Agriculture Committees have pushed back scheduled votes on the CLARITY Act as lawmakers attempt to build broader bipartisan coalitions.
Witt framed the choice facing the industry in political terms: work within today’s crypto-friendly environment to pass imperfect legislation, or risk Democrats crafting more restrictive rules following a future financial crisis.
“You might not love every part of the CLARITY Act, but I can guarantee you’ll hate a future Dem version even more,” the White House advisor wrote, urging stakeholders to recognise that reaching the 60-vote threshold in the Senate requires compromise.
The legislative process hit turbulence after Coinbase, a major Trump campaign donor, withdrew support for the bill’s current draft. The exchange cited concerns over language affecting tokenized securities, decentralized finance privacy protections, and restrictions on stablecoin yield products—the latter being a point of contention with traditional banking institutions.
Armstrong announced plans to engage bank leaders at Davos this week to find middle ground on the stablecoin yield dispute, signaling the company hasn’t abandoned efforts to shape the legislation.
The Senate Agriculture Committee has set January 27 for its markup session, while the Banking Committee has not announced a rescheduled date following last week’s postponement. Banking Committee Chairman Tim Scott confirmed no alternative timeline has been established.
Witt’s intervention highlights growing tensions within the crypto lobbying community over strategic priorities. While some advocates prefer holding out for ideal regulatory terms, the White House advisor argued this approach risks squandering a rare political window when Republicans control both congressional chambers and the presidency.
The executive director emphasised that crypto regulation is inevitable—making the current debate about timing and authorship rather than whether rules will materialize at all. He characterized the present moment as an opportunity that may not return if the industry allows legislative momentum to collapse.
“Let’s keep working to improve the product, recognizing that compromises will need to be made in order to get 60 votes in the Senate, but let’s not let perfect be the enemy of the good,” Witt wrote in his social media statement.
Armstrong described the disputed provisions as “problematic” and potentially damaging to innovation when announcing Coinbase’s position shift last week. The CEO indicated that his company views the current bill text as creating worse conditions than existing regulatory uncertainty.
Despite the public disagreement, Armstrong clarified on Monday through video message that Coinbase remains engaged in the legislative process and committed to finding solutions that satisfy both crypto companies and traditional financial institutions concerned about competitive advantages in the stablecoin market.
