The future of a comprehensive crypto market structure bill in the United States Senate is uncertain after Coinbase withdrew its support, leading to the postponement of a crucial markup hearing. The Senate Banking Committee, initially aiming to define the bill's language and parameters, has delayed the process indefinitely.
Coinbase CEO Brian Armstrong announced the company's decision to withhold support on Wednesday, citing "too many issues" with the current draft. Armstrong argued that certain provisions would make the situation "materially worse than the current status quo," specifically highlighting concerns about tokenized equities, decentralized finance (DeFi), the role of the Securities and Exchange Commission (SEC), and stablecoin rewards. He stated a preference for no bill over a "bad bill".
The decision to pull support was not taken lightly, according to sources familiar with the matter. The release of the bill text on Monday, just days before the scheduled markup, revealed problematic sections, including a new focus on illicit finance. With amendments due Tuesday afternoon, and over 70 being filed, there were concerns that the issues raised would not be adequately addressed.
The bill, in its current form, seeks to establish legal parameters for blockchain tokens by dividing primary oversight between the SEC and the Commodity Futures Trading Commission (CFTC). However, disagreements persist regarding stablecoin rewards, DeFi regulations, and the balance of power between the SEC and CFTC.
Senate Banking Committee Chairman Tim Scott announced the postponement of the markup, emphasizing that discussions were ongoing. He stated that "everyone remains at the table working in good faith" and that the bill reflects months of bipartisan effort and engagement with regulators. However, no new date for the markup has been set.
The crypto community has reacted with mixed sentiments. Ripple CEO Brad Garlinghouse expressed optimism that issues could be resolved through the markup process. Conversely, Galaxy Head of Research Alex Thorn pointed to amendments, such as stricter DeFi oversight and a proposed ban on tokenized stocks, as wins for the banking sector.
The delay raises questions about the timeline for passing comprehensive crypto legislation. The initial goal of September 2025 was missed, followed by a revised target of the end of the year. With lawmakers and industry representatives at odds, the path forward remains unclear. Senator Cynthia Lummis suggested the markup could occur before the end of January, but this remains uncertain.
Coinbase's withdrawal highlights the challenges of aligning industry, political, and regulatory interests in the rapidly evolving digital asset space. The company has been critical of limitations on interest-bearing stablecoins, viewing them as a protectionist measure by the banking lobby. As negotiations continue, the industry awaits a revised draft that addresses concerns and fosters innovation while protecting investors.
