Big week: What was shaping up to be a pivotal week for U.S. crypto regulation took an unexpected turn on Wednesday. After months of bipartisan negotiations, momentum around the market structure bill stalled when Coinbase withdrew its support for the Senate Banking Committee’s long-awaited draft, citing unresolved concerns around DeFi, privacy, and stablecoin yield.
Why it matters: The market structure bill is the most anticipated piece of crypto legislation in the U.S. It offers long-awaited legal certainty by defining key terms around digital assets and DeFi and dividing oversight between the SEC and CFTC. Crucially, by anchoring definitions in statute, the bill would limit regulatory discretion and significantly reduce sensitivity to shifts in U.S. administrations’ approach to digital assets.
Process recap: The legislation requires action from both the Senate Banking Committee (which oversees the SEC and securities) and the Senate Agriculture Committee (which oversees the CFTC and commodities). Because of their separate jurisdictions, each committee drafts and marks up its own bill text. Once both are finalized, the texts are merged and the full Senate votes on the combined legislation.
First mover: By publishing its final 278-page text on Tuesday, the Banking Committee moved first. However, the release quickly exposed several unresolved fault lines that had persisted throughout negotiations.
Core issues: Longstanding disputes resurfaced around tokenized equities and ethics rules for lawmakers and senior officials. In addition, the bill’s DeFi provisions drew criticism from parts of the industry, particularly around data access and user privacy.
A win for the banking lobby? One of the most contentious provisions concerned stablecoin rewards. The draft would prohibit companies from paying yield simply for holding stablecoin balances, while still permitting incentives tied to specific user actions such as transacting, staking, or account activity.
Early optimism: Despite these issues, some industry voices remained supportive of the bill and hoped it could be improved over the course of the legislative process. Peter Van Valkenburgh, executive director of the nonprofit policy organization Coin Center, wrote:
“Coin Center’s mission is to protect software developers and non-custodial, decentralized tools. Judged by that standard, we’re optimistic about where the current market structure draft stands.”
Frustration: But for Coinbase, the text still included too many issues, with the company citing “a de facto ban on tokenized equities, DeFi prohibitions that give the government unlimited access to financial records and remove the right to privacy, and amendments that would kill rewards on stablecoins, allowing banks to ban their competition.”
The final blow: As a result, CEO Brian Armstrong announced on Wednesday afternoon that the company was withdrawing its support for the bill.
Strong signal: As one of the industry’s most influential and well-capitalized voices on Capitol Hill, Coinbase’s move had a major impact and dimmed hopes for a successful markup. Hours later, Banking Committee Chairman Tim Scott (R-SC) postponed the vote.
What’s next? While the Agriculture Committee is still expected to hold its own markup in two weeks, it remains unclear whether the Banking Committee’s delay will affect that timeline, particularly given its lead role on several of the bill’s most contested provisions.
Anja von Rosenstiel is a Lecturer at Boston University School of Law and a Research Fellow at several nonprofit organizations focused on supporting decentralization.
Negotiating the market structure bill is hard for two reasons.
First, the process is moving under real external time pressure. With midterms approaching and heavy outside lobbying, the process is moving fast and leaving little room for the kind of iterative feedback a 278-page framework needs. Compared to GENIUS, the process is rather rushed, and leaves no time to build a durable bipartisan groundwork.
Second, DeFi is structurally difficult to legislate. The core question is where responsibility should sit: at the protocol, at the interface, or with centralized gatekeepers that provide access. That makes definitions around access and “control” unusually high-stakes.
This is also why Coinbase is pushing back. Beyond the stablecoin-yield fight, a broad DeFi framing could attach new liabilities to exchanges that offer access to protocols. And in today’s legal environment, Coinbase is arguably already in a comfortable position without new legislation. In that context, the incentive is to slow things down, renegotiate, or accept no bill at all, rather than lock in a bad framework.
