Battle With Bankers Tarnishes Crypto Market Structure Bill Near Passage

The U.S. Senate is moving toward a potential breakthrough in long-awaited cryptocurrency regulation as lawmakers prepare to debate a bipartisan market structure bill this week. The legislation aims to clarify jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), offering clarity to the rapidly evolving digital asset sector.

SEC Chair Paul Atkins emphasized the importance of the bill, calling it a pivotal moment for crypto regulation and a step toward positioning the U.S. as a global leader in the space. The framework would establish consistent rules for trading, custody, and oversight of cryptocurrencies.

The bill has drawn support from the crypto industry, which has long lobbied for clear regulatory guidelines. However, tensions have emerged between banks and crypto firms over issues like stablecoin rewards and anti-money laundering provisions, with some provisions under negotiation.

Why Did This Happen?

The push for the bill comes amid growing pressure from lawmakers and regulators to modernize the U.S. financial market. The legislation is seen as a response to years of regulatory uncertainty that has hindered digital asset adoption.

Atkins highlighted that the bill would reduce ambiguity in the current framework by clearly dividing oversight between the SEC and CFTC. This could end long-standing confusion over which agency governs different crypto products and services.

The bill also addresses recent regulatory developments, including the GENIUS Act, which established the first federal framework for stablecoin regulation.

What Are Analysts Watching Next?

Key debates have centered around stablecoin interest rates and the role of the CFTC in overseeing spot markets. Bank lobbyists have argued that allowing exchanges to pay interest on stablecoins could weaken the traditional banking system by siphoning deposits away.

Crypto companies, in contrast, have pushed for flexibility in offering rewards for user activity, warning that overly restrictive provisions could hinder innovation and competition.

Coinbase, a major crypto exchange, has raised concerns about proposed restrictions on stablecoin rewards, with the company reportedly considering withdrawing its support if the bill includes language that limits such incentives.

The bill's future remains uncertain, with some industry insiders skeptical about its chances of passing before the 2026 midterm elections. If it stalls, crypto firms may be left relying on regulatory guidance that could shift under future administrations.

How Will This Affect Investors?

Investor protection has emerged as a central theme in the debate. Lawmakers like Elizabeth Warren have expressed concerns about the risks of including crypto in retirement accounts like 401(k)s, citing the asset's volatility and lack of transparency.

Warren, in a letter to SEC Chair Paul Atkins, called for greater clarity on how the SEC plans to mitigate risks for workers who might be exposed to crypto in their retirement portfolios.

The SEC has emphasized its commitment to balancing innovation with investor protection, a stance that aligns with the Trump administration's broader goal of making the U.S. the "crypto capital of the world."

The bill's final language will likely shape how digital assets are treated in retirement plans, with potential implications for millions of Americans.

The Senate Banking and Agriculture Committees are scheduled to hold markup sessions on the bill, with final language expected to reflect ongoing negotiations between crypto advocates and banking regulators.

If passed, the legislation could serve as a foundation for future reforms and help position the U.S. as a leader in the global crypto market.

Analysts and investors are closely watching whether the bill will reach the president's desk and how it will ultimately be implemented. The outcome will influence market confidence and shape the regulatory landscape for years to come.