3 hours ago
955
Treasury Secretary Scott Bessent delivered a rebuke to cryptocurrency companies opposing congressional efforts to regulate digital assets, telling executives who prefer minimal oversight that they can relocate to El Salvador rather than operate in the United States.
In testimony before the Senate Banking Committee on Thursday, Bessent singled out what he described as a “nihilist group in the industry” that would rather see no regulation pass Congress than accept what he characterized as sound oversight of the crypto sector.
Bessent’s comments can be seen as the most direct confrontation a member of the Trump administration has had with digital asset firms since taking office.
“We have to get this Clarity Act across the finish line,” Bessent said. “Any market participants who don’t want it should move to El Salvador.”
The reference to El Salvador, which adopted Bitcoin as legal tender in 2021, may be seen as a jab at crypto executives who envision operating without the kind of regulatory constraints the Clarity Act will be bringing into the space.
Bessent’s remarks follow Coinbase’s withdrawal of support for the Digital Asset Market Clarity Act in January 2026, derailing a planned Senate Banking Committee vote on legislation.
Some members of the crypto community agree with Coinbase’s position.
Why did Coinbase withdraw its support for the Clarity Act?
The Treasury Secretary’s appearance came as lawmakers are working to revive momentum on the Clarity Act, which aims to resolve jurisdictional disputes between the Securities and Exchange Commission and the Commodity Futures Trading Commission while establishing clear frameworks for digital commodities, investment contracts, and stablecoins.
The bill had been positioned as the crypto industry’s best chance for comprehensive federal regulation after years of enforcement actions and legal uncertainty.
Coinbase CEO Brian Armstrong torpedoed the fragile legislative consensus hours before the scheduled January markup, declaring in a social media post that the company would “rather have no bill than a bad bill.”
One of Armstrong’s reasons for withdrawing their support for the act is the provisions that would effectively prohibit crypto exchanges from offering yield or rewards on stablecoin holdings, such as USDT or USDC, where Coinbase owns a minority stake.
The stablecoin yield dispute pits crypto firms against traditional banks, which have lobbied for restrictions they say are necessary to prevent deposit flight from savings accounts.
The stakes for Coinbase are also high, as the exchange reported $355 million in stablecoin-related revenue in the third quarter of 2025. Analysts project that total annual revenue from such a program could exceed $1 billion.
Senate drafts of the bill would bar digital asset providers from paying passive yield simply for holding stablecoins, while allowing activity-based rewards tied to transactions or liquidity provision. Understandably so, many crypto firms are not happy with this arrangement.
What are legislators saying concerning the crypto negotiations?
During Thursday’s hearing, Senator Mark Warner, a key pro-crypto Democrat who has spent months negotiating the bill’s finer points, expressed frustration with the drawn-out process. “I feel like I’m in crypto hell,” Warner said, eliciting laughter in the hearing room.
Another senator who pushed for the Senate to make progress on the Act is Sen. Angela Alsobrooks, who has proposed a solution to the stablecoin yield problem in the not-so-distant past.
She said, “I speak for many of my colleagues when I say that we really want to get to a good, bipartisan bill.” She is confident that the Senate will reach a bipartisan compromise that protects innovation and community banks.
Sen. Cynthia Lummis raised the question about the need to pass a crypto market structure bill, also called Clarity.
Bessent stated, “It’s impossible to proceed without it.”
In his statement before the Senate Banking Committee, Bessent said, “There seem to be people who want to live in the US, but not have rules for this important industry, and we’ve got to bring safe, sound, and smart practice.”
Bessent criticized what he termed “regulation by reflex” under the Biden administration, arguing that preoccupation with climate risks and reputation concerns had contributed to the second, third, and fourth-largest bank failures in US history in 2023.
The White House was reportedly not pleased with Coinbase’s withdrawal of support for the bill, while some crypto companies still side with the administration on passing the bill.
Bessent’s appearance before the Committee comes as Bitcoin has dropped by over 32% in 2026, trading around $63,100 after trading above $97,000 at some point in January. The cryptocurrency’s decline was accelerated today, falling by over 12% following Bessent’s separate testimony to the House Financial Services Committee, which ruled out any government bailout of digital assets.
Claim your free seat in an exclusive crypto trading community - limited to 1,000 members.
English (US)