US Crypto Market Structure Bill in Limbo as Industry Pulls Support

The U.S. Senate’s proposed crypto market structure bill faces mounting uncertainty after major industry players, including Coinbase, signaled they may withdraw support. The legislation, aimed at defining regulatory boundaries between the SEC and CFTC, has become a battleground for competing interests within the crypto ecosystem according to reports.

Industry stakeholders remain divided over key components of the bill, particularly the SEC’s expanded regulatory authority. Critics argue the bill erodes the CFTC’s jurisdiction and favors a centralized regulatory framework over decentralized innovation as analysis shows.

Regulatory clarity is a core objective of the legislation, but industry groups are pushing back against provisions they see as restrictive. DeFi developers, for instance, have raised concerns about potential liability for software creators under the current draft according to reports.

Why Did the Industry Pull Support?

Coinbase and other firms have voiced opposition to a ban on stablecoin rewards, a provision now included in the bill’s language. These rewards, offered by exchanges to users holding dollar-pegged tokens, are a significant source of income for platforms like Coinbase as data indicates.

Banking sector lobbyists argue that such rewards resemble traditional deposit products, raising risks for consumer protection and financial stability. They have pushed for the prohibition to prevent stablecoins from siphoning capital away from traditional banks according to analysis.

What Are Analysts Watching Next?

Lawmakers are still negotiating the final language of the bill, with key issues including DeFi protections, stablecoin yield restrictions, and ethics provisions. The Senate Banking Committee is expected to hold a markup session on January 16 as reported.

Industry groups and lawmakers have emphasized the need for clear statutory definitions rather than relying on future regulatory guidance. Without such clarity, the risk of regulatory arbitrage and market fragmentation increases according to industry analysis.