Leadership1 publisher3 min readPublished
Armstrong publishes his defense before the Journal publishes its story
The Coinbase CEO says the Wall Street Journal is preparing to blame him for the CLARITY Act's Senate defeat, and he has put his own account of January on the record while the SEC and CFTC say they will write crypto's rules themselves.
The Board Room · Leadership desk
What happened
- Armstrong said on Sept. 19 that the Wall Street Journal is preparing a story blaming him and Coinbase personally for the CLARITY Act's Senate defeat, and he posted his own account before it ran.
- On Jan. 14, on the eve of a Senate Banking Committee markup, he said Coinbase could not support the draft bill, and the committee postponed the session almost immediately.
- The committee advanced a revised bill 15-9 on May 14 with Democratic Sens. Angela Alsobrooks and Ruben Gallego voting in favor; both voted no on the Sept. 15 cloture motion.
- The cloture vote fell short of the 60 votes needed to advance, even after sponsors made 126 concessions to win support.
- U.S. spot bitcoin exchange-traded funds shed $450 million on Sept. 15, and bitcoin's price slid below $76,000.
Compiled by The Board RoomSomething wrong?How this is made
Why it matters
- decision The venue for crypto rules is now two agency chairs who have both said they intend to write them, so a compliance plan built this quarter rests on discretion a later chair can revise.
- exposure Armstrong has fixed his version of January in public before reading the article, so whatever he left out of it is the Journal's strongest available lead.
- constraint The banks' argument that stablecoin rewards pull deposits out of the banking system stopped a markup in January and was still being negotiated in September, so the next attempt starts from it.
- precedent An executive who answers an unpublished story once has set the expectation for every piece after it, and reporters will now write knowing the defense is already with the reader.
Pre-butting works on one asymmetry: the defense arrives first, so the article has to answer it. Armstrong's account is dated and specific. He said he opposed the January draft because it "needed a lot of work on DeFi, tokenization, CFTC authority, and stablecoin rewards" [8], and that "All four of the items I called out were fixed in the draft that then went through the committee about four months later" [9]. The committee vote came four months to the day after the postponed markup [1]. He also accused the paper of "regurgitating bank lobby talking points" and said the Journal "takes direction from bank lobbyists instead of reporting the truth" [3]. As of Saturday the Journal had not published the story he described, so its argument is still unknown [4].
The case a skeptic would put is short. Coinbase blocked a markup in January over stablecoin yield, the point banks press hardest because interest-like rewards can pull deposits out of the banking system [7], and the bill did not reach a cloture vote until eight months later [2]. Coinbase then lobbied hard for the revised bill through the summer [12], and Armstrong said "The final draft of CLARITY that went to the Senate was great, and I strongly supported it" [11]. The sequence holds, but nothing in the record ties the January delay to the bill's sixtieth vote.
The yield fight followed the bill to the floor. The concession package that failed included a Treasury "circuit breaker" meant to stop stablecoin rewards from draining community-bank deposits [14]. In the House, Rep. Maxine Waters blamed missing ethics safeguards around the president's crypto ventures, and Rep. Tom Emmer called the defeat a delay [17].
Both market regulators have since said they will move without Congress. SEC Chair Paul Atkins pledged to "act decisively within the SEC's statutory authority" [19], and CFTC Chairman Mike Selig said his agency is "locked in and ready to ship its rules" [20]. Armstrong, who said after the vote that "The CLARITY Act didn't advance in the Senate today, which was a disappointment," argued the two agencies already have the tools to write the rules themselves [18]. Rules made under existing authority can be drafted in months, and the chair who drafts them can be replaced. In January, Armstrong's standard was that "no bill is better than a bad bill" [5].
Seven Democratic senators vowed on Sept. 16 to keep pushing the bill [21]. Until one of them finds a sixtieth vote, the terms are whatever Atkins and Selig choose to ship. Armstrong closed Saturday's post with a forecast: "people are smart enough to see through it these days, and it backfires on them every time" [22].
What to watch
- Whether the Journal publishes, and whether its account of January matches Armstrong's four-item list.
- Whether the seven Democratic senators produce a second cloture vote, and whether Alsobrooks and Gallego return to yes.
- The first SEC or CFTC rule proposal written under existing authority, and how much of CLARITY's text it reproduces.