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Jan 14 (Reuters) - Coinbase CEO and co-founder Brian Armstrong said on Wednesday the company cannot support a draft legislation U.S. senators introduced earlier this week aimed at creating a regulatory framework for cryptocurrencies.
The legislation, unveiled on Monday, seeks to define when crypto tokens are securities, commodities or otherwise and would also hand policing of spot crypto markets to the Commodity Futures Trading Commission.
Without the backing of Coinbase it is unclear if the markup of the bill can proceed. The firm donated millions of dollars to political action committees (PACs) aimed at getting pro-crypto candidates elected in 2024, and has been a key stakeholder in the bill negotiations.
Armstrong said the bill had "too many issues", including a de facto ban on tokenized equities, an erosion of the CFTC's authority and draft amendments that would "kill rewards on stablecoins".
CFTC did not immediately respond to a Reuters request for comment.
Cryptocurrencies need to be treated on a level playing field with other financial services, Armstrong said.
"We'd rather have no bill than a bad bill," the Coinbase CEO said, adding that he is "quite optimistic that we will get to the right outcome with continued effort."
The bill, which could change as senators consider amendments, prohibits crypto companies from paying interest to consumers solely for holding a stablecoin.
However, it allows crypto companies to pay rewards or incentives to customers for certain activities, such as sending a payment or participating in a loyalty program.
The Senate Banking Committee markup, during which lawmakers introduce amendments and debate the legislation, is scheduled for 10 a.m. ET Thursday.
