The Senate Banking Committee has decided to delay the markup of its crypto market structure bill until late February or March, signaling a significant slowdown in a legislative effort that many had hoped would bring regulatory clarity to the digital asset space in the near term. This postponement comes after Coinbase Global Inc. (NASDAQ: COIN) withdrew its backing due to unresolved differences over stablecoin reward provisions and a broader pivot by lawmakers toward addressing housing policy.
Housing policy has risen sharply on the Senate's legislative agenda after President Donald Trump issued an executive order aimed at restricting large institutional investors from acquiring single-family homes. This move reflects growing political sensitivity to housing affordability, which remains the largest monthly expense for many Americans and a substantial factor contributing to inflationary pressures. With midterm elections approaching, Republicans are focusing on affordability issues as a means to regain political ground following a series of unfavorable race outcomes in late 2023.
This strategic realignment within the Senate Banking Committee means the crypto industry and financial sector stakeholders face extended timelines to influence regulatory frameworks. While more time provides room for advocacy, it simultaneously raises doubts about the bill's ultimate success in navigating political and industry hurdles.
Coinbase's Withdrawal and Legislative Impacts
Coinbase’s decision to pull its support stems primarily from disagreements with banking interests over certain stablecoin reward policies embedded in the proposed legislation. Sources familiar with ongoing discussions indicated that both Republican committee members and the White House are urging Coinbase and the wider cryptocurrency industry to reconcile these contentious issues with banking entities before the bill is brought back to the floor for debate.
Originally, the Banking Committee had scheduled a markup hearing where lawmakers would debate the bill's text and proposed amendments before voting on its progression. This session has been indefinitely postponed pending resolution of the outstanding disputes.
Agriculture Committee Advances Alternative Crypto Proposal
In contrast to the Banking Committee’s pause, the Senate Agriculture Committee unveiled its own digital asset legislation and plans to conduct a markup on January 27. However, this version lacks the endorsement of Democratic Senator Cory Booker, fueling concerns that it could be perceived as partisan and face obstacles in garnering the 60 votes required in the full Senate for passage.
Senate Agriculture Committee Chairman John Boozman recognized the persistent divisions, stating, “differences remain on fundamental policy issues,” yet emphasized the need for legislative momentum by adding, “it’s time we move this bill.”
The complete Senate must eventually reconcile the Agriculture Committee’s proposal with the Banking Committee’s framework to form a unified bill for final approval. Without bipartisan support, the legislation confronts significant challenges in overcoming the Senate’s procedural voting thresholds.
Political and Market Reactions
The legislative postponement came shortly after President Trump praised the initiative as a “new pathway for Americans to reach financial freedom,” underscoring its potential significance. Patrick Witt, executive director of the White House council on digital assets, cautioned critics against rejecting the current bill in pursuit of perfection, arguing that future Democratic proposals could be less favorable to the industry.
Insiders tracking the legislative progress expressed that a Banking Committee vote by late March and a full Senate passage by July 4 would still be consistent with legislative norms, allowing the House to act either following midterm elections or during the lame duck session. This timeline extends the period before any regulatory clarity can be expected from Congress, potentially affecting trading strategies and market stability in the cryptocurrency sector.
For traders and investors, the delay removes a near-term catalyst that might have clarified crypto market oversight, meaning anticipations of swift congressional approval will need to be adjusted, with renewed momentum unlikely before early spring.
Key Points
- The Senate Banking Committee has postponed its crypto market structure bill markup to late February or March.
- Coinbase withdrew support due to unresolved issues with stablecoin reward provisions in discussion with the banking sector.
- Senate focus has shifted toward housing legislation following an executive order limiting institutional home purchases.
- The Agriculture Committee is progressing on separate crypto legislation that may face partisan challenges.
Risks and Uncertainties
- Ongoing disagreements between crypto firms like Coinbase and banking institutions could further delay regulatory legislation.
- Partisan divides in the Senate may hinder passage of a unified digital asset bill, especially without key Democratic support.
- The prioritization of housing policy reduces legislative bandwidth and attention for crypto market reform.
- Extended timelines may lead to uncertainty and increased volatility in crypto markets absent clear regulatory frameworks.
Disclosure: The article reports on legislative developments impacting cryptocurrency regulation and does not constitute investment advice.