Senate Crypto Bill Stalls as Coinbase Withdrawal Trigger a Delay
It was a pivotal week for crypto policy on Capitol Hill which concluded without the anticipated vote, as the Senate Banking Committee postponed its planned markup of landmark market structure legislation.
The decision to delay came after a series of last-minute disagreements, with industry leaders expressing concerns that proposed amendments favored traditional finance.
The withdrawal of support from a major exchange; Coinbase, was a significant factor, creating uncertainty about the bill’s future path forward.
Industry Pushback
The markup, initially seen as a major step toward establishing a comprehensive regulatory framework for digital assets, was derailed by mounting industry frustrations.
Stakeholders argued that proposed amendments to the 278-page bill were ceding too much ground to banks and traditional financial institutions.
Key areas of contention included provisions related to stablecoin yield and the tokenization of real-world assets.
The Banking Association felt it would create an uneven playing field of crypto exchanges were allowed to provide these yield bearing instruments to the customers.
However, pro crypto advocates posited that this bill, as written, could stifle innovation within the native crypto ecosystem.
The turning point occurred when Coinbase CEO Brian Armstrong announced his company was withdrawing its support for the legislation.
In a post on X, Armstrong stated that the current version of the bill would be
“materially worse than the current status quo” and that the company would “rather have no bill than a bad bill.”
This reversal from one of the industry’s most influential voices was considered a serious blow, potentially signaling to undecided senators that the legislation lacked the necessary consensus from the sector it aims to regulate.
Coinbase Withdraws Support
While Coinbase’s departure was significant, it did not trigger a complete industry exodus.
A coalition of other leading firms and trade associations, including a16z, Circle, Paradigm, Kraken, Ripple, Coin Center, and the Digital Chamber, issued separate statements reaffirming their support for continuing the negotiation process.
Kraken co-CEO Arjun Sethi emphasized the importance of perseverance, stating that it is
“hard and what actually matters is continuing to show up, working through disagreements, and building consensus.”
This division highlighted the complex and varied priorities within the digital asset industry regarding regulatory outcomes.
Uncertain Future Path
In the wake of the postponement, the future timeline for the crypto market structure bill remains unclear.
Senate Banking Committee Chairman Tim Scott (R-SC) stated that “everyone remains at the table working in good faith” but did not provide a new date for the markup.
The Senate is now out of session for a week, and it is unknown how this delay will impact the related work of the Senate Agriculture Committee, which also has a planned markup.
The core issues that triggered Wednesday’s fallout are expected to remain central to negotiations as lawmakers and the industry reset and attempt to find a path forward.
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