If you thought crypto regulation was messy before, Thursday delivered a fresh reminder that nothing in Washington moves smoothly. Coinbase Global Inc. (COIN) and Robinhood Markets Inc. (HOOD) both took a beating as the long-awaited Senate crypto market-structure bill ran straight into a wall of industry pushback and political gridlock.

Armstrong Drops the Hammer on Draft Legislation

The sell-off kicked off after Coinbase CEO Brian Armstrong publicly declared the exchange could no longer support the Senate Banking Committee's latest draft. In a post on X, Armstrong didn't mince words. He argued the bill would effectively ban tokenized equities, impose sweeping surveillance requirements on decentralized finance platforms, shift regulatory power from the CFTC to the SEC, and "kill" rewards on stablecoins.

Armstrong's verdict? No bill would be better than this one. That's a pretty stark position for a CEO whose company has been begging for regulatory clarity since, well, forever. But the draft apparently crossed enough red lines that Coinbase decided scorched earth was the better play.

Senate Hits Pause as Industry Revolts

Hours after Armstrong's broadside, Senate Banking Committee Chair Tim Scott announced that markup of the legislation would go on "brief pause," though he insisted all parties remain engaged in negotiations. Translation: the bill isn't dead, but it's definitely not moving forward anytime soon.

Sen. Cynthia Lummis, a vocal crypto advocate, called the industry pushback "deeply disappointing." Meanwhile, investor David Sacks and Galaxy Digital CEO Mike Novogratz urged negotiators to use the delay constructively and hammer out a compromise that the industry can actually live with.

A Galaxy Research note published this week put the odds of genuinely bipartisan legislation at just 25%. If talks collapse entirely, any comprehensive federal framework could be pushed out to 2027, leaving the crypto industry in regulatory purgatory for years.

Robinhood CEO Piles On the Pressure

Not to be left out, Robinhood CEO Vlad Tenev also weighed in, blasting the "legislative gridlock" that keeps staking unavailable in four U.S. states and prevents the company from offering tokenized stocks domestically, even though it already offers them to customers in Europe. Tenev urged Congress to pass rules that "protect consumers and unlock innovation," a diplomatic way of saying the status quo is terrible for everyone.

Why This Bill Is Make-or-Break for Coinbase

For Coinbase, the stakes couldn't be higher. The company's entire U.S. strategy hinges on whether federal regulators can create clear, durable rules that allow it to scale its business without constantly fighting case-by-case enforcement actions.

The draft language Armstrong opposes would effectively bar tokenized equities, sharply restrict DeFi operations and stablecoin rewards, and tilt regulatory authority from the CFTC toward the SEC. All of those provisions directly constrain some of Coinbase's highest-potential product lines and future revenue streams.

A constructive version of the bill, on the other hand, could clarify which digital assets qualify as securities, create a licensed path for crypto exchanges to operate with confidence, unlock institutional demand that's currently sitting on the sidelines, lower Coinbase's massive regulatory and litigation overhang, and prevent more trading volume from migrating to offshore platforms. That's the difference between treading water and actually growing.

Why Robinhood Needs This Bill Just as Badly

For Robinhood, the bill is equally pivotal. The company's vision is to build a low-cost brokerage super app that seamlessly integrates stocks, options, and crypto. But that only works if there's a coherent federal framework governing which tokens can be listed, how staking works, and whether tokenized equities are permissible.

A clear set of rules would harmonize the patchwork of state and federal regulations, specify which tokens a retail broker can safely offer, create compliant pathways for staking and tokenized securities, reduce headline regulatory risk, and let Robinhood compete on innovation rather than legal compliance. Without it, the company is stuck offering a watered-down crypto product in the U.S. while its European competitors race ahead.

Market Data Shows Momentum and Volatility

Market data platforms assign Coinbase a Momentum score of 8.46, signaling heightened volatility in the current environment. That's not surprising given the regulatory uncertainty and the fact that crypto markets have been anything but stable lately.

For Robinhood, the numbers tell a different story. The stock earns a 94.33 Momentum score alongside a 91.00 Growth score, highlighting unusually strong performance despite the recent turbulence. Robinhood has been on a tear, but Thursday's drop is a reminder that regulatory risk remains a major overhang.

Thursday's Price Action Tells the Story

COIN Price Action: Coinbase shares closed Thursday down 6.48% and up 0.57% in after-hours trading, last trading at $240.65, according to market data.

HOOD Price Action: Robinhood shares closed Thursday down 7.79% and up 1.47% in after-hours trading, last trading at $111.97.

Both stocks recovered slightly after hours, but the damage was done. Investors are coming to terms with the reality that comprehensive crypto regulation may still be a long way off, and that means more uncertainty, more litigation risk, and more potential for sudden policy shifts that can swing stock prices by double digits in a single session.