As the Senate Banking Committee prepares to debate long-awaited legislation that would create regulation for the crypto industry, the fate of the bill hangs in the balance Coin library CEO Brian Armstrong expressed his disapproval in a post on Wednesday night X.
“We’d rather have no bills than bad debt,” Armstrong wroteoutlined some of the criticisms of the blockchain industry, including a key battle with the banking industry over providing incentives for stablecoin holdings. “Hopefully we all get better drafts.”
The legislation focuses on market structure issues, such as the division of regulation between different federal agencies, which have long been a priority for the cryptocurrency industry. The bill would address thorny issues that led to lawsuits by previous administrations, including how to classify and regulate different types of cryptocurrencies.
The cryptocurrency industry, which helped elect a wave of pro-blockchain candidates fueled by millions in campaign donations, scored a major victory this summer with the passage of the bill. Genius Actwhich establishes a regulatory framework for stablecoins, or a U.S. dollar-backed cryptocurrency. But the market structure has proven trickier, especially after the banking lobby objected to a provision in the Genius Act that would have allowed companies to offer stablecoin earnings to customers, similar to savings accounts.
After the House introduced a version of market structure legislation called the Clarity Act in July, the Senate delayed consideration of the bill. But with the Senate Banking Committee finally scheduled to debate amendments in the markup process Thursday morning, debate over yields and conflict-of-interest ethics provisions targeting the Trump administration could hamper the bill’s progress.
“There’s a good chance this will blow up in the committee,” one cryptocurrency lobbyist said. wealthspoke on condition of anonymity to discuss sensitive industry dynamics. “People are very excited here.”
lack of clarity
For many in the crypto industry, the success of this summer’s stablecoin-focused Genius Act is just the appetizer for the main course: broad market structure legislation that will finally give legitimacy to the renegade industry. But after years of heated debate, the product coming out of the Senate may be worse than no bill at all.
The most important wedge issue heading into Thursday remains the battle for stablecoin yields. There is a bank lobby debate The Genius Act effectively creates a loophole that prevents stablecoin issuers themselves from providing benefits to users, but allows partners and third parties to provide rewards. These programs are crucial for many cryptocurrency companies, such as Coinbase, report Stablecoin-related revenue in the third quarter of 2025 was US$355 million and provided benefits to holders of the stablecoin USDC. Bank lobbyists believe this could threaten the U.S. financial system by siphoning money from bank deposits.
A bipartisan group of senators has proposed a compromise in the Clarification Act, which would allow cryptocurrency companies to provide revenue for stablecoin-related transactions (similar to credit cards) as well as other activities. But it’s unclear whether Coinbase, one of the most outspoken and deep-pocketed cryptocurrency figures in Washington, will support the agreement, and Armstrong’s post on Wednesday seemed to indicate it would take a hard line.
“It’s still in the negotiation phase,” said Ron Hammond, director of policy at cryptocurrency trading firm Wintermute. “But it’s cryptocurrency and there’s always last-second drama, so it seems to be one of the wedges here.”
Another debate pushed by Democrats is language that would prevent politicians, including the president, from profiting from crypto assets or interests. The issue has become a lightning rod due to the Trump family’s deep entanglement with the cryptocurrency industry, including its digital asset platform world free financerecently applied for a federal banking license. But Republicans strongly opposed the possibility, with Senate Banking Committee Chairman Tim Scott (R-S.C.) Tell CoinDesk On Wednesday, ethics provisions were not part of the Clarification Act.
But a letter sent to Scott and Ranking Member Elizabeth Warren (D-Mass.) by multiple nonprofit watchdog groups, wealthCalling the lack of provisions in the proposed bill to address government conflicts of interest “deeply concerning”.
If Democrats like Ruben Gallego (D-Ariz.), who calls the ethics provision a “red line,” withdraw their support, the bill could get stuck in committee, requiring a simple majority vote, though Republicans grab the edge.
One lobbyist who spoke on condition of anonymity lamented that the bill tilted left in order to gain bipartisan support, including passing additional provisions to regulate DeFi, or decentralized finance, as well as the listing process for crypto tokens and transferring oversight responsibilities to the Securities and Exchange Commission. ‘They’ve lost their North Star,’ lobbyist told wealth.