Crypto Developer Protections Don't Belong in Market Structure Bill, Senators Say

The U.S. Senate Agriculture Committee has postponed the markup of a key cryptocurrency market structure bill to late January, according to Senate Republicans. The bill is expected to define the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in regulating the crypto industry. The bill is separate from the House’s CLARITY Act, passed in July, due to procedural rules.

The Senate’s draft bill, titled the Digital Asset Market Clarity Act, was introduced by Senator Cynthia Lummis to bring regulatory clarity to the crypto market. It outlines how digital assets should be overseen by the SEC and CFTC, aiming to reduce overlap between agencies and provide a standard framework for how crypto assets are issued and traded.

The bill also includes the Blockchain Regulatory Certainty Act, which provides protections for blockchain developers who do not control user funds. Developers who create or maintain software would not be treated the same as financial intermediaries under the proposed legislation.

Why Did This Happen?

The Senate Banking Committee postponed a markup of the CLARITY Act after Coinbase, a major cryptocurrency exchange, withdrew its support. Coinbase CEO Brian Armstrong cited concerns over stablecoin rewards and the bill’s potential to subvert the CFTC’s authority. The company argued that the current version of the bill is "materially worse than the current status quo".

Lawmakers and industry representatives remain at the negotiating table, with Senator Tim Scott emphasizing the need for bipartisan agreement. The Senate Agriculture Committee, which oversees the CFTC, is also rescheduling its markup session to January 27.

How Did Markets React?

The cryptocurrency market responded negatively to the delay in the bill’s discussion. Bitcoin dropped below $96,000, losing 1% of its value. Ethereum, XRP, Solana, and other major altcoins also declined, with long liquidations rising significantly. The market’s bearish bias is evident as more bullish positions are liquidated.

Despite the market dip, technical indicators suggest that bullish momentum may still be in play. The Relative Strength Index (RSI) is at 65, and the Moving Average Convergence Divergence (MACD) is still rising. A recovery could extend the price to the $100,000 psychological milestone.

What Are Analysts Watching Next?

Analysts are closely watching the ongoing negotiations between lawmakers and industry representatives. JPMorgan expects a rebound in institutional crypto flows in 2026 if the anticipated regulatory measures pass. However, the bill’s implementation could take years, similar to the Dodd-Frank Act.

Some industry leaders argue that clarity should come from statute rather than regulatory guidance. Others, like Kraken’s Arjun Sethi, believe walking away now would lock in regulatory uncertainty.

The bill’s key contentious issues include stablecoin yield restrictions and the lack of clarity on government officials profiting from crypto. These issues may require further clarification and new definitions.

The Senate Democrats are set to resume talks with industry representatives on Friday. Lawmakers and industry participants remain optimistic that a consensus can be reached soon.

The bill’s success depends on bridging the gap between Democratic demands and industry objections. With the Senate’s 60-vote threshold and an election year ahead, passing the bill faces additional hurdles.