Brian Armstrong sharply criticized the Senate Democrats’ proposal to treat DeFi front-ends as brokers, warning of serious consequences for U.S. crypto innovation.
Armstrong: “A Bad Proposal That Threatens Innovation”
Coinbase CEO Brian Armstrong issued a public rebuke of a new legislative proposal from Senate Democrats. The proposal aims to regulate DeFi front-ends (such as wallets and dApps) as licensed brokers.
In a post on social platform X (formerly Twitter), Armstrong stated:
We absolutely won’t accept this. This is a bad proposal that will halt innovation and prevent the U.S. from becoming the crypto capital of the world.
Despite his criticism, he added that Coinbase will continue working with lawmakers because “legislation is a process” that requires cooperation between the industry and regulators.
What Does the Senate Proposal Include?
According to Politico, the proposal being circulated among Senate Democrats is part of a broader framework to regulate crypto market structure. It proposes that:
- Any individual or company earning revenue from a DeFi front-end (e.g. wallet or dApp)
- Must register with the SEC or CFTC,
- And operate as a licensed broker.
In practice, this would place nearly all user-facing components of DeFi platforms under regulatory oversight—not just centralized services.
Crypto Industry Voices Concern
Armstrong is not alone in his response.
Summer Mersinger, CEO of the Blockchain Association and former CFTC commissioner, stated:
This proposal would effectively ban DeFi, wallet development, and other applications in the U.S.
She argued that the language of the proposal is “impossible to comply with” and would push responsible developers offshore. Mersinger called for a bipartisan approach and policies that encourage technological progress.
Legal Community: “This Is a Crypto Ban”
Jake Chervinsky, Chief Legal Officer at venture firm Variant, also weighed in on X, saying the proposal amounts to a de facto ban on crypto.
According to him, regulators are acting aggressively and without a clear understanding of decentralized technologies, creating real risk for innovation in the U.S.
Conclusion
The Senate proposal to regulate DeFi front-ends as brokers has sparked strong criticism from key figures in the crypto industry. Coinbase and other organizations are calling for a more balanced and technologically informed regulatory framework. Without it, the U.S. risks losing its leadership in crypto innovation.
Frequently Asked Questions
Find answers to the most common questions below.
It aims to classify DeFi front-ends as brokers, requiring them to register with the SEC or CFTC and operate under licensing rules.
Armstrong believes the proposal would stifle innovation and stop the U.S. from becoming a global leader in the crypto sector.
Industry leaders warn that the proposal could effectively ban DeFi development in the U.S. and push developers overseas due to overly strict requirements.
This article is for general informational purposes only and is not intended to be, and should not be construed as, legal or investment advice. Crypto-assets are highly volatile, so only invest funds that you are willing to lose and use your own research and risk management.
