Crypto Sentiment Drops Amid Unease Over US Market Structure Bill

The U.S. Senate Banking Committee has postponed its markup of the Digital Asset Market Clarity Act, a key piece of legislation aimed at regulating the crypto industry, following the withdrawal of support from major exchange Coinbase. The delay adds to earlier postponements by the Agriculture Committee and extends uncertainty around the bill's timeline. The bill is intended to clarify the regulatory roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) and establish a federal framework for digital asset oversight. The move comes as crypto firms and lawmakers continue to negotiate over contentious provisions, including restrictions on stablecoin rewards and DeFi activities.

Senate Banking Committee Chair Tim Scott stated that bipartisan negotiations are continuing in 'good faith' and that the goal is to deliver clear rules for the industry. The bill, if passed, would be the first comprehensive federal statute governing crypto market structure in the U.S.. It would also redefine compliance obligations for exchanges, stablecoin issuers, and DeFi platforms, reshaping the regulatory landscape.

Coinbase CEO Brian Armstrong cited 'too many issues' with the current draft, including what he described as a de facto ban on tokenized equities and restrictions on DeFi. This withdrawal significantly impacted the momentum of the bill and led to the postponement.

Why Did This Happen?

The delay reflects unresolved disagreements between crypto firms and traditional banks over provisions like stablecoin yield and tokenized securities. The current Senate draft would prohibit paying interest simply for holding a payment stablecoin, while allowing limited, activity-based rewards. This has created tensions between crypto companies, which argue that restrictions could undermine innovation and liquidity, and traditional banks, which warn that such rewards could drain insured deposits.

The issue of stablecoin rewards has become a central point of contention, with Coinbase and other crypto platforms reliant on these revenues. Restrictions could impact their business models, particularly during slower trading periods. Additionally, the lack of clarity on jurisdictional lines between the SEC and CFTC has created uncertainty over how tokenized assets would be regulated.

How Did Markets React?

Cryptocurrency prices edged lower on Thursday morning trading, with Bitcoin slipping 0.8% in the last 24 hours to $96.2K, while Ethereum edged down 0.3% to $3.34K according to market data. The market's reaction to the delay suggests growing concern about the potential for further regulatory restrictions, particularly around stablecoin rewards and DeFi.

Bitcoin dipped below $96,000 at press time on Thursday, down 1%, as traders priced in the Senate's announcement. The intraday pullback risks breaking the streak of four consecutive days of recovery. If Bitcoin ends the day in red, it could extend the decline to the 50-day Exponential Moving Average (EMA) at $92,089.

What Are Analysts Watching Next?

Analysts at Benchmark view the delay as a potential pause rather than a setback, offering committees more time to work through policy disagreements. The delay may ultimately be constructive, as it provides more time to refine the bill and build bipartisan support for floor passage. However, not all analysts are optimistic about the delay's impact. Compass Point analysts have lowered their confidence in the bill's near-term future, putting its odds of passage at 60%.

The delay raises the possibility that the final version of the bill will be more durable and workable, potentially reshaping U.S. financial markets and unlocking deeper institutional participation in crypto. Nonetheless, the growing industry opposition and unresolved disagreements over stablecoin yield and jurisdictional authority remain major hurdles for the legislation.

Former SEC Chief Accountant Lynn Turner has also raised concerns about the bill's investor-protection mechanisms, arguing that the draft lacks the transparent, reliable, and timely financial information needed for robust oversight. He has called for explicit statutory amendments requiring audited financial statements, internal control certifications, and independent audits by PCAOB-registered firms.

The outcome of these negotiations will be critical for the crypto industry, as it seeks to establish a stable regulatory framework that balances innovation with investor protection. The final version of the bill, once passed, could define the future of crypto markets in the U.S. and set a precedent for global regulation.