Coinbase CEO has publicly condemned a new DeFi market structure proposal from Senate Democrats, calling it a threat to innovation and the US crypto industry.
A new decentralized finance (DeFi) proposal from Senate Democrats has sparked widespread industry criticism and stalled bipartisan talks on a comprehensive crypto market structure bill. Critics argue the plan would effectively ban DeFi in the US by requiring KYC for non-custodial wallets, designating developers as financial intermediaries, and giving the Treasury unchecked power to create a “restricted list” of protocols.
Coinbase CEO Brian Armstrong condemned the proposal on Oct. 9, 2025, calling it “bad, plain and simple” and a setback for US innovation. He vowed that Coinbase would continue to engage with Congress to protect economic freedom.
We absolutely won’t accept this
It’s a bad proposal, plain and simple, that would set innovation back, and prevent the US from becoming the crypto capital of the world.
But legislating is a process, and we’re committed to engaging and helping Congress get it right. We will keep… https://t.co/SmHsBgFRoE
— Brian Armstrong (@brian_armstrong) October 10, 2025
Other industry leaders quickly detailed their concerns. Jake Chervinsky, Chief Legal Officer at Variant, labeled the proposal a “crypto ban”. He warned it would force all US DeFi developers offshore by defining anyone who deploys or benefits from a protocol as an intermediary.
1/ Senate Democrats are trying to kill market structure.
A group just sent a counter-proposal to the RFIA and it is deeply unserious. These Senators claim to be pro-crypto, but what they propose is basically a crypto ban.
It's hard to imagine a good deal happening right now 🧵 https://t.co/yL5bDbdCvq
— Jake Chervinsky (@jchervinsky) October 9, 2025
The Blockchain Association’s CEO, Summer Mersinger, said the proposal’s language is “impossible to comply with” and would “effectively ban” DeFi and wallet development in the United States.
2/ The language, as drafted, would make compliance impossible, pushing responsible development and the next wave of financial technology offshore. DeFi might survive – but it would thrive overseas, not here at home.
— Summer Mersinger (@SKMersinger) October 9, 2025
Bipartisan Talks Stall in the Senate
The contentious proposal brought negotiations to an abrupt halt. According to Punchbowl News, Senate Banking Committee Republicans paused all further meetings until Democrats agree to schedule a markup session for the bill. A spokesperson for Chairman Tim Scott (R-S.C.) called the Democratic document an unserious, “not good-faith effort,” adding that it “included multiple incoherent policy ideas.”
The dispute has devolved into finger-pointing. Jacques Petit, a spokesperson for Sen. Ruben Gallego (D-AZ) accused Republicans of leaking the proposal and “crashing out” of talks. In response, Scott’s office said leaking private communications shows a focus on “political narratives than serious work.”
New statement from Sen. Gallego (D-Ariz.) spox Jacques Petit on this: https://t.co/ZxAMpzjyra pic.twitter.com/kZvD3eSWm3
— Brendan Pedersen (@BrendanPedersen) October 9, 2025
This stalemate in the Senate contrasts sharply with the House of Representatives’ progress, which passed its CLARITY Act with wide bipartisan support in July. The breakdown in talks also sidelines a previous Republican draft, the Responsible Financial Innovation Act (RFIA), which included strong developer protections. The dispute highlights ongoing US crypto regulation challenges and the growing divide on how to handle the industry, even as state-level crypto adoption continues.
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