The major cryptocurrency legislation is still alive and could make a comeback next month, as the battle with Wall Street continues.

Senate Faces Delays on Crypto Market Structure Legislation

With the U.S. Senate set to take a break next week before returning to address the federal budget deadline of January 30, it appears likely that the Senate Banking Committee will revisit the crypto market structure bill in February. However, regardless of the timing, the digital asset sector still faces significant opposition from established financial industry lobbyists if it hopes to achieve meaningful reforms that would benefit crypto businesses.

Even after Coinbase’s public withdrawal of support for the bill on Wednesday, nearly all stakeholders—including Coinbase itself—have indicated a willingness to resume negotiations. While crypto companies have expressed frustration over the recent influence wielded by Wall Street lobbyists representing banks and securities firms, voicing complaints alone will not be enough to overcome the entrenched policy resistance. Key disagreements remain between the crypto industry and traditional finance, particularly after banking interests succeeded in imposing limits on how stablecoin yield rewards can be distributed.

Coinbase has consistently identified the issue of stablecoin yield as its primary concern, yet lawmakers from both parties remain unconvinced by the compromise at the heart of the committee’s latest draft. Bankers have argued that stablecoin yields could undermine the banking system’s reliance on deposits, a point that has resonated with legislators who value their relationships with local community banks—even among Democrats who have historically been wary of Wall Street.

Elsewhere in the bill, securities industry lobbyists have pushed for tighter restrictions on decentralized finance (DeFi) protections. While lawmakers are accustomed to working with representatives from banking and securities, the crypto industry is still relatively new to these legislative battles. Jaret Seiberg, a seasoned financial policy analyst at TD Cowen, noted that the current compromise on yield appears to be the only realistic path forward, but so far, the debate is not favoring crypto interests.

“It’s difficult to envision another viable middle ground,” Seiberg wrote to clients on Thursday. “This could ultimately come down to a straightforward vote on whether stablecoins should be allowed to earn rewards on platforms.”

He also outlined the challenges the crypto sector faces in the coming weeks: “We believe banks have the upper hand in such a vote, despite the crypto industry’s larger campaign contributions,” Seiberg explained. “Community banks hold significant sway in their local areas, which translates to influence on Capitol Hill.”

Legislative Timeline and Political Dynamics

Crypto advocates in Washington have been anxious about the rapid pace set by Senate Banking Committee Chairman Tim Scott, as several major issues remain unresolved in the bill. Scott explained in an interview with CoinDesk that he is pushing lawmakers who are hesitant to take a stand because they fear the consequences of voting against the bill.

According to Seiberg, the process is now likely to be delayed “until at least February.” The Senate’s schedule remains unpredictable, influenced by both international crises (such as those involving Venezuela and Greenland) and domestic disputes (like those in Minnesota). Nevertheless, both parties have invested considerable effort into advancing crypto legislation, signaling a commitment to reaching a resolution despite ongoing disagreements elsewhere.

It’s important not to overlook the parallel discussions happening in the Senate Agriculture Committee, where bipartisan negotiations are still underway. Republican Chairman John Boozman has announced a hearing scheduled for January 27, and has praised Democratic Senator Cory Booker as a valuable partner in these talks.

Congressional Challenges and Political Realities

The crypto sector is known for its strong reactions to legislative setbacks, such as the outcry on social media last October when Democrats floated controversial ideas regarding DeFi. However, legislative progress in Congress is often marked by setbacks and restarts. For example, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act encountered numerous obstacles last year, including a period in May 2025 when Democrats halted its progress. The bill ultimately passed a month later with broad bipartisan support.

As Chairman Scott told CoinDesk, “People are deeply invested in this issue.”

Scott also noted that some lawmakers are wary of the political fallout from voting against crypto legislation. This concern is underscored by the Fairshake political action committee’s filings with the Federal Election Commission, which reveal that the crypto industry’s leading super PAC has over $100 million ready to support pro-crypto candidates in the upcoming congressional elections. Fairshake has already emerged as a major force in campaign finance and is entering this election cycle with even greater resources.

The coming weeks will reveal how much influence the crypto industry’s lobbying efforts have gained in Congress. Months of negotiations and extensive staff work on Capitol Hill demonstrate that both parties are determined to keep moving forward. When Chairman Scott postponed this week’s markup hearing, he described it as only a “brief pause.”

Senator Cynthia Lummis, who leads the committee’s crypto subcommittee, emphasized in a Thursday post on X that “everyone is still at the negotiating table.”

Although the heightened political climate of the midterm elections is expected to complicate legislative progress later in the year, history shows that major financial reforms can still be achieved under such circumstances. The Dodd-Frank Act, a landmark response to the 2008 financial crisis, was enacted in July 2010, just months before that year’s midterms.

However, one of the central disputes over the market structure bill is unrelated to market structure itself: the Democrats’ proposed ethics provision. Scott has stated that his committee lacks the authority to address this issue, while some Democrats insist it must be resolved—pointing to former President Donald Trump’s personal involvement in the crypto industry as evidence of potential conflicts of interest.

Senator Ruben Gallego, the lead Democratic negotiator on anti-corruption measures, told reporters that he requires assurances on an ethics provision before he can support the bill.

Meanwhile, crypto advocates are focusing on their own priorities, such as yield policy, the regulatory scope of federal agencies, and potential restrictions on DeFi that could threaten the sector’s future.

Despite withdrawing support for the current legislation, Coinbase CEO Brian Armstrong remains optimistic about reaching a positive outcome through continued dialogue.

Cody Carbone, CEO of the Digital Chamber and a prominent proponent of crypto legislation, stressed that “inaction is unacceptable.”

“We cannot afford to leave the negotiating table when regulatory clarity is within reach,” Carbone said in a statement on Thursday. “Advancing market structure is essential, and the only way to achieve lasting policy is to keep negotiating until the job is done.”