On Thursday, Senator Cynthia Lummis of Wyoming revealed that the Senate Banking Committee has decided to pull a cryptocurrency market structure bill from consideration just one day before its scheduled vote. The decision was largely influenced by apprehensions from banks and credit unions about the risk of losing deposits if the bill allowed crypto firms to offer interest payments on stablecoins. This postponement shifts the legislative process into the spring season.
During an appearance on Fox with Maria Bartiromo, Senator Lummis clarified that the withdrawal of the bill from the markup was not solely due to commentary from Coinbase, but also because of broader concerns among committee members. Foremost among these concerns was the anxiety that conventional banking institutions might see substantial deposit withdrawals if crypto companies are authorized to provide interest earnings to holders of stablecoins.
Supporters of traditional banking institutions voiced worries that customers could be incentivized to migrate their funds from low-yield checking accounts, which typically pay returns below 0.1%, into stablecoins offering significantly higher yields—often between 3 and 4 percent. This shift could disrupt the deposit base that banks rely on to fund loans critical to businesses and community development.
Senate Majority Leader John Thune of South Dakota has committed to reserving time on the Senate schedule later in the spring to allow for reconsideration of the bill. However, he noted the challenges in securing floor time for such a contentious piece of legislation.
Earlier in the week, a White House-hosted meeting convened representatives from both the banking sector and cryptocurrency associations to attempt to reconcile their opposing positions. Attendees included groups like the American Bankers Association, Independent Community Bankers of America, the Blockchain Association, and The Digital Chamber. Despite both sides characterizing the discussions as constructive, no resolution was achieved. Observers expect that further talks will be necessary to bridge the divides.
The primary contention revolves around whether cryptocurrency firms should be permitted to attract customers by offering returns on stablecoins pegged to the U.S. dollar, such as Circle's USD Coin. Banks contend that allowing such interest payments could lead to a migration of as much as $6.6 trillion out of the traditional banking system, threatening their fundamental funding structures.
Conversely, companies within the crypto industry argue that the ability to provide these yields is essential for competitive customer acquisition and that prohibiting such rewards would stifle market innovation.
This legislative delay dashes hopes for near-term regulatory clarity that many anticipated could unlock significant institutional capital inflows into the sector. The Senate Banking Committee's postponement follows an earlier delay last month amidst concerns over insufficient support for the bill. Notably, the House of Representatives had already passed its version of the legislation in July.
Market conditions remain challenging, with Bitcoin prices trading down nearly 40 percent from their October peak, yet the fear among banks of losing deposits to crypto firms endures. This persistent worry reflects the sector's perception of cryptocurrency as a structural threat to traditional banking's deposit base, independent of short-term market volatility.
With the legislative timeline now extended into the spring, resolution may be pushed closer to the 2026 midterm elections—a period typically characterized by reduced enthusiasm for passing contentious reforms.