State of Crypto: Market Structure Bill Faces Delays and Complex Negotiations
No Senate markup hearing was held this week on the cryptocurrency market structure legislation, with time constraints pushing the chances of its passage into 2026. Lawmakers must reconcile two committee drafts from the Banking and Agriculture committees and obtain approval from both chambers to enact the law, with the House having already backed its own market structure bill.
Key sticking points in the negotiations include defining and regulating decentralized finance (DeFi), treatment of stablecoin yields, bipartisan staffing of the SEC and CFTC, and ethics commitments related to former President Trump. Senators, including Warner, are seeking anti-money-laundering safeguards for DeFi and a regulatory perimeter to address concerns about implementation and support.
The debate is heavily influenced by traditional finance lobbying and fears of regulatory arbitrage, as legislators aim to balance maintaining industry support without unduly restricting innovation. Trump's involvement remains a wildcard, as Democrats demand ethics provisions and the White House signals possible compromises may be needed to build broader support.
A markup session in January remains possible, but the success of the bill depends on markups by the Senate and Agriculture Committee and subsequent reconciliation efforts. Lawmakers target passing the legislation before April 2026, though delays risk weakening its chances. Additionally, an ongoing funding fight, with the continuing resolution set to expire January 30, could further delay progress if a government shutdown occurs.
